Welcome to the Q4 Fiscal Year 2018 ResMed Incorporated Earnings Conference Call. My name is Tim and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. Please note that this conference is being recorded. I'll now turn the call over to Amy Wakeham, Vice President, Investor Relations and Corporate Communications. Amy, you may begin.

Great. Thank you, Tim. Good afternoon, good morning, everyone. Thanks for joining us and welcome to ResMed's earnings call for the fourth quarter of fiscal year 2018 ending June 30, 2018. This call is being webcast live and the replay along with a copy of the earning press release and our investor presentation will be available on the Investor Relations section of our corporate website. Joining me on the call today to discuss our quarterly results are Mick Farrell, our CEO; and Brett Sandercock, our CFO. Other members of management will be available during the Q&A portion of the call following our prepared remarks. During our call, we will discuss some non-GAAP measures. For reconciliation of the non-GAAP measures, please see the notes to the financial statements in today's press release. And as a reminder, our discussion today may include forward-looking statements, including, but not limited to, expectations about ResMed's future performance. We believe these statements are based on reasonable assumptions, however, actual results may differ. Please refer to our SEC filings for a discussion of the risk factors that could cause actual results to differ materially from any forward-looking statements. I'd like to now turn the call over to Mick.

Thanks, Amy, and thank you to all of our shareholders that are joining us today, as we review results for the fourth quarter of fiscal year 2018. On today's call, I will review top level financial results, some business highlights and a few key announcements from the quarter. Then, I will hand the call over to Brett, who will walk you through our financial results in further detail. So, first, our top level financial results. We achieved another quarter of broad-based strong performance and I'd like to recognize the continued hard work that our 6,000-strong team has put in to achieve these results. Revenue once again grew by double digits, 12% on a headline basis and 10% on a constant currency basis, led by our sleep and respiratory care therapy businesses, performing well across global markets in both devices and masks. We also achieved good continued growth in our cloud-based Software-as-a-Service business. In addition to strong top line growth, our focus on operating leverage has resulted in continued bottom line success, with non-GAAP operating profit improving 19% year-over-year. Our efforts across the board from top line to bottom line performance resulted in non-GAAP diluted earnings per share of $0.95. So, now some business highlights across our sleep and respiratory care business. Turning to a discussion of our business and its operations, so let's start with this part. We continue to pioneer and lead the industry in connected health and digital health. We now have over 8 million patients supported by our cloud-based patient management system called AirView and well over 5 million patients with 100% cloud-connected devices that are available for remote daily monitoring. In addition, over 1 million patients have signed up to access and review their own data with our personal patient engagement app called myAir. Our big…

Yeah. Thanks, Mick. In my remarks today, I will provide an overview of our results for the fourth quarter of fiscal year 2018. As Mick noted, we had a strong quarter. Group revenue for the June quarter was $623.6 million, an increase of 12% over the prior year quarter. In constant currency terms, revenue increased by 10%. Taking a closer look at our geographic distribution and excluding revenue from our Brightree Software-as-a-Service business, our sales in U.S., Canada and Latin American countries were $346.7 million, an increase of 10% over the prior year quarter. Sales in Europe, Asia and other markets totaled $236.5 million, an increase of 15% over the prior year quarter. Sales in constant currency terms in combined Europe, Asia and other markets increased by 9% over the prior year quarter. Breaking out revenue between product segments, U.S., Canada and Latin America device sales were $189.9 million, an increase of 9% over the prior year quarter. Masks and other sales were $156.8 million, an increase of 12% over the prior year quarter. For revenue in Europe, Asia and other markets, device sales were $162.2 million, an increase of 12% over the prior year quarter, or in constant currency terms, a 6% increase. Masks and other sales were $74.3 million, an increase of 22% over the prior year quarter, or in constant currency terms, a 16% increase. Globally, in constant currency terms, device sales increased by 8%, while masks and other sales increased by 13% over the prior year quarter. Brightree revenue for the fourth quarter was $40.4 million, an increase of 12% over the prior year quarter. During the rest of my commentary today, I'll be referring to non-GAAP numbers. The non-GAAP measures adjust for the impact of amortization of acquired intangibles, restructuring expenses and tax-related expenses associated…

Thanks, Brett. We will now turn to the Q&A. I'd like to remind everyone to limit yourself to one question and one follow-up. If you have additional questions, please feel free to get back into the queue. Tim, we are now ready for the Q&A portion of the call.

Thank you. We will now begin the question-and-answer session. Saul Hadassin with UBS is online with a question.

Thanks very much. Good morning. Can you hear me?

We can hear you loud and clear. It's actually good evening here, Saul, in Munich.

Good evening. Good evening in Munich, Mick. Can I just ask about masks, particularly in the U.S.? So strong growth rate there. You mentioned market share – taking market share. Can you maybe comment a bit more on the contribution from growth in the resupply business? And cognizant that Brightree had some acquisitions during the year, the quarter as well, just in terms of the performance of ResMed resupply and Brightree, just how they are contributing to the resupply growth as evident in the mask growth rate this quarter?

Yeah, absolutely, Saul. We talk about sort of the devices growing in the mid-single digits and the masks growing at the high single-digits. And so clearly, 13% constant currency growth of our masks and accessories business in the U.S., kind of Latin America being 12% on a constant currency basis, we clearly took some share. And you saw in our sort of organic growth within the Brightree business, that was also in parallel actually a 12% on our Software-as-a-Service business. And clearly, that does through Brightree resupply and Brightree connected ResMed resupply, there are some combinations that are driving our share growth through not only first time set up of these great new masks, the N20 and the F20, but also through those resupply programs. So there's a combination of both of them coming into play into that really solid 12% growth number in the U.S. and really good global growth of 13% constant currency as well.

Thanks. So just one follow-up on that. Just the launch of QuietAir, how significant or how material was that? When did it come – actually, when was it rolled out during the quarter?

Yes. So it was rolled out during the quarter. And as you know, Saul, our market is not uniform and so it's multiple contact points, over 3,000 contact points within just one geography, the U.S., and multiple in many of the markets that we go to through homecare providers. So it's account by account and doctor by doctor. They get to see it and start to write prescriptions for it and homecare providers start to adopt it. In our patient markets, like Australia and UK, you've got to get the word out and they've got a big social media drives and all that to get that technology there. But, look, I personally use one of these devices in QuietAir, the ability to have that level of noise reduction to well below the air conditioning – most QuietAir conditioning system in anyone's bedroom is incredible and a great advance. And I think this technology has lots more legs than just one quarter and we've got a lot of runway to go in QuietAir. But it was really just launched during this last quarter and so we've got a lot of runway ahead on that.

All right. Thanks very much, Mick.

Thanks, Saul.

Margaret Kaczor with William Blair is online with a question. Margaret M. Kaczor - William Blair & Co. LLC: Hey, good evening, guys, and thanks for taking the questions. First of all, I wanted to touch a little bit on the device growth that we saw internationally. Can you give any more color in terms of how big of an impact Japan had? Are you seeing more patients getting diagnosed or are you seeing more fleet upgrades? And how should we think about that benefit over the next kind of 12 to 18 months (00:31:10)

Yeah, Margaret, thanks for the question. Look, we had some really good growth in devices in Europe, Asia and our global markets, 6% on the constant currency basis and actually even better growth within U.S., Canada, Latin America of 9%. We had the benefits of the changes in reimbursements in both Japan and France, which are the sort of S curves of growth that we've been talking about over the last number of quarters and those Ss will start to taper off as we talked about, but those devices that are now set up are 100% cloud-connected. And if you go back to the study I referred to in the prepared remarks, if you have a resupply program and if a patient has cloud connectivity, you start to get adherence rates in 80% range, just in cloud-connected and using myAir. And then, you add on the resupply program, which leads to even greater adherence. That combination we think will be powerful to be able to drive long-term mask and accessory growth across that patient group. So if you like, getting a connected device in there is the gift that keeps on giving. Margaret M. Kaczor - William Blair & Co. LLC: Got it. And then, just to follow up with a similar question, in the U.S., obviously, the U.S. device number ended up being quite strong again. And so I think, generally, when you talk to investors, they'll be surprised that you continue to take share, you continue to see strong underlying market growth. So are you seeing existing DMEs or maybe already ResMed purchasers buying more of them? Are you seeing more of the fleets moving towards ResMed? Are you seeing that incremental buyer come in and say, I'm going to standardize on ResMed? Thank you.

Yeah. Thanks for the follow-up, Margaret. Look, I think it's a combination of a little bit of all the above. If our devices are able to save you 50% labor cost on setting up the devices, it's really – you have Adam Smith's invisible hand helping you choose ResMed at the homecare provider level. And if you're a physician and writing prescriptions and you can do this AirView based management by exception and automated connectivity and follow-up with your patients through the Air Solutions platform and particularly through AirView, then you're going to write more prescriptions for our product. So it's both of the above. And look, I do think, to your third point, we are betting on the winners. The people that are adopting ResMed's cloud-connected devices are the ones that are taking share in their geographies, whether it's the Southeast in the United States or whether it's Western France, and now in Japan. And so, I don't think that this is the end of it. I think this is the start of it. And as we said in the prepared remarks as well, Margaret, we're not satisfied with the current market growth, particularly with these new prevalence numbers showing over 900 million people with sleep apnea. We think that our partnership with Alphabet and Verily, and our partnership with Pegasus Capital and Dr. Oz to just drive awareness of sleep and then specifically sleep apnea so that we get more patients into the diagnostic and therapeutic funnel is a strategic imperative for ResMed. And we're not going to accept not being able to drive that market growth rate up as well as continue to take share.

Anthony Petrone from Jefferies is on the line with a question.

Thanks again for the question. Just a few contribution questions in the quarter. Just wondering what acquisition contributed there and maybe just an update on Mobi, as that's under controlled launch and what your expectations are perhaps into the fourth quarter for Mobi? Maybe once it's under a full launch in 2019, how big of a market opportunity do you see Mobi and what does the margin profile for that product look like? Thanks.

Yeah, Anthony, thanks for the two questions. I'll take them in reverse order. I'll take the Mobi question and hand the contribution question over to Brett in Sydney. But, yeah, look, I know that here in Germany healthcare – ResMed healthcare office here in Germany, and there's really a great market and is biggest economy in Europe for portable oxygen concentrators. And so we think long-term, there is a really exciting opportunity globally for ResMed with portable oxygen concentrators. Our controlled launch is really focused in the U.S. primarily and it's about our go-to-market model. When you talk about market potential, look, there are a number of players in this space. We're not alone in having a portable oxygen concentrator. What I think we bring to the table is the ResMed brand, ResMed quality, reliability, the awareness amongst pulmonary doctors of our brand name. And I do think that will contribute a lot to the prescriptions that we've started to get and will continue to get with Mobi. But as I said in the prep remarks and you alluded to there, Anthony, we're doing a controlled launch and then we will go to a stronger, larger launch as we refine that go-to-market model. So throughout FY 2019, 2020 and beyond, you're going to see ResMed be a major player in the global portable oxygen concentrator market. And it won't just be having a device that filters nitrogen. Its' going to be a device that's smart, that moves with the patient and is mobile, is small, quite, comfortable, high-quality oxygen output and also, ultimately, a system that'll have connectivity and will link up to Air Solutions and all the value that we provided in digital health across the rest of our business. Brett, do you want to take the first part of Anthony's question about contributions from organic versus inorganic?

Yeah. Sure, Mick, thank you. Anthony, we've got – I mean we've made a couple of tiny acquisitions over FY 2018. So in terms of group results, it was really pretty much de minimis in terms of their contribution. It's pretty much organic growth that you're seeing.

Thanks again.

Thanks, Anthony.

Joanne Wuensch is on the line with BMO Capital Markets with the question.

This is Steve (00:37:31) on of Joanne. Can you guys hear me okay?

Can hear you loud and clear, Steve. (00:37:35)

Awesome. Hey, I appreciate some of the early commentary on the HEALTHCAREfirst integration and just piggybacking on the last question. But can you talk about some of the strategy behind combining it with the Brightree offering and maybe some of the revenue and cost synergies we should be focused on in the long-term?

So, really, HEALTHCAREfirst, I mean, as Brett said, it was de minimus. I mean, we only really just closed it recently and so there was no sort of revenue impact in the numbers that we talked about in FY 2018. But as we look forward, and as Brett indicated in the prep remarks, it's about $30 million run rate trailing revenue in this business and we expect that to grow pretty fast. The home health and hospice sectors of out-of-hospital care are very fast growing. We've got an aging population. People want to age in place. They don't want to be in hospital. They don't want to be in an acute care setting. And so we're really seeing great growth – just secular growth within those two segments. And HEALTHCAREfirst has an excellent offering and Brightree home health and hospice has an excellent iPad app and capability and really user friendly for the home nurses and the folks that are walking around hospice agencies and traveling around to people's homes for the home nursing and home health. So we are really excited about the strategic combination of those two parts of our business and we have some really strong leadership that have experience at much larger companies within this space. And we're very excited about those sectors. So you're going to see ResMed invest for organic and inorganic growth across the out-of-hospital software part of our business.

Okay, great. And just as a quick follow-up, just a competitive question, now that we have sort of one more quarter under your belt, have you guys seen any further impact from the masks from Philips?

Yeah. Look, I mean we don't go into details around other than the fact that we're taking share versus our competitors, but I might hand to Jim Hollingshead to give a little more detail. He's President of our Global Sleep business. He can maybe talk a little bit about the innovation of N20 and F20 and how they're beating the competition and how that works. Jim?

Yeah. Thanks, Mick. See, as Mick says, we don't go into details about specific – really, in general about our competitor shares, specific competitive products. I'll just say that we feel very comfortable with our mask portfolio. The whole portfolio continues to perform very well both in the U.S. and in global markets. The F20 full face mask is performing extremely well and continues to be in a very strong leadership position in the market with the QuietAir vent adding to that offering. And we're very confident in our portfolio.

Okay, great. Thanks for taking the questions.

David Bailey from Macquarie is on the line with a question. David Bailey - Macquarie Securities (Australia) Ltd.: Yes. Good morning. It's David from Macquarie. Just my first question is in relation to Mobi in portable oxygen concentration. Seen some of your competitors looking to employing a direct-to-consumer strategy. You've previously said you're looking at partnering with the HME channel in terms of your own strategy. Can you just talk through how you plan to go about things on the go-forward basis in the POC space?

Yeah. Thanks for the question, David. And as you mentioned, there are a couple of competitors doing a variety of different go-to market models. Our goal is, we really like our U.S. homecare provider customers. The HME is a great customer base we partnered with for decades to help grow this market. And they have the best people to start working on reimbursement models and to understand Medicare reimbursement and private care reimbursement for POCs. And so we're really partnering with them on that. And we're also partnering with them on the best way to get the product to patients who want to pay cash. And so you'll see us work with the channel and help support them with many different models in this space. But rather than – because I'm sure our competitors will be reading this transcript or listening live to go into the details of that go-to-market model. I'll just say that our model is going to be more partnership with the channel than that what we're seeing, I think, from some others is competition with the channel. I just don't think that's a smart move. I think you want to partner and understand how you can grow as you have for a number of decades other parts of the business like our sleep apnea franchise that we've grown incredibly well with our U.S. HME partners and our French homecare providers, and our Japanese homecare providers and grow in those spaces. And so, obviously, every market in the world is different. We have different go-to-market models in Germany or Australia, New Zealand. But I think your question was about the U.S. market where our focus is partnership with the HME channel and helping both of us win. And additionally, really most importantly, helping that patient win and get access to ResMed's POC if they want to. David Bailey - Macquarie Securities (Australia) Ltd.: That's great. Thanks. That's very clear. And just a follow-up from me. Just in terms of resupply in some of the new markets that you've entered, France and Japan, the U.S. obviously eligible for full mask to run. (00:42:59) How does the resupply criteria or eligibility criteria in the rest of world compared to what you see in the United States?

Yeah, David. It's a good question. Let's talk about the resupply side of our business. In the U.S., every payer operates differently. There are some private payers that is two full mask systems per year, 10 or more cushions per year. There's some that are three full mask systems and even some that are four full masks systems. I think what it's really about is checking in with the patient because you want to make sure that that patient wants the new mask, is ready for a new mask and is engaged in this therapy. And, David, as you heard me say in the prep remarks, when you engage with the patient around a resupply program and you're checking with them, do you want to be email, do you want to be text, do you want to be a live call. And you ask them, how, when and where they want to find that out, and to what level do we partner with the channel to check on reimbursement and to help them provide shipping and follow-up care to that patient. We're seeing really good growth of that resupply business. So, look, it's a long-term play. I think you saw in the quarter really good mask growth from us not just in the U.S., but also in Europe. Every market is different. You actually find sometimes in patient pay markets like Australia, New Zealand, and Singapore, and UK, that patients are even more active in working with the adherence models because it's their own mask and they get to choose when they want it. But the really important thing is, ask the patient, get in touch with them, and we're seeing really good success as you saw in the quarter there. David Bailey - Macquarie Securities (Australia) Ltd.: That's great. Thanks for the detail.

Thanks, David.

David Low with JPMorgan is online with a question.

Thanks very much. If I could just start with the restructuring, so we saw another round of restructuring going through, just if I could get you to comment on whether that's now complete. And then, sort of to the operating leverage, which has been such a strong driver of earnings in recent times, is a lot of what you're seeing going forward – going forward in the guidance reflecting the benefit from that restructuring or there a broader opportunity on the operating leverage front?

Yeah. I'll hand the first part of question over to Brett, who will talk about the restructuring and then maybe, Brett, you can have a go with the operating leverage and hand back to me or anyone else in the team you think appropriate.

Sure. Thanks, Mick. Yeah, Dave, we – I mean, we've got – that's sort of like the global restructure was in Q3 and we did flag up that we'd have this final charge coming through into Q4. So that's essentially that one that's completed. And then, probably you sort of see some of that benefit from the Q3 restructuring, I guess, coming through. But that was really around strategically looking at kind of where we wanted to balance resources and so on, what we felt we needed to invest in. So it's a much broader picture in terms of what we're trying to do. If you look at the kind of operating leverage, we're pretty committed on that and we're really looking to see how we can do things smarter, or how we can do them differently. And then, really, looking at how can we achieve scale, and then as we grow revenues, grow SG&A at a lower clip than that. So there's a lot we're doing there, a lot we're doing around business excellence program and things like that. We're really trying to make sure that we're operating as efficiently as we can. But I don't want you to feel – we're really cognizant that we'll be continuing to invest for the long-term sustainable growth in the business, so we won't back off that whatsoever. We do think we can manage in terms of efficiencies and scale and then kind of how we deliver particularly around kind of back office, if you like. So we're continuing that program, but the aim is to support the long-term sustainable growth.

Okay, great. I mean, I might just switch topics. The sales line was pretty much where we expected and clearly very strong across masks in the U.S. The one part that was a little softer to my mind was the device sales outside the U.S., Europe and Asia, particularly in light of the commentary that we heard about France and Japan being strong, Korea perhaps a bit earlier stage. But is there anything else across the region that would explain if France and Japan was strong? Why perhaps 6% growth was – is certainly down a bit on what we saw in Q3. Just wondering if there's anything else happening in other markets perhaps?

Yeah. Thanks for the question, David. And we did flag this last quarter when we saw pretty strong outside U.S. device growth in that high single, low double digits last quarter. And what we said was that some of the step-up like in Japan, where it's a fleet sale to Japanese home care providers based upon that telemonitoring chain that it would be sort of a one to one and a half quarter effect. And so, I think you're seeing that Japan – in and Japan out element from Q3 to Q4. But, look, 6% growth in devices in Europe, Asia and around the world is a really solid number. I mean you're talking mid- to single digits growth globally in that space normally and ResMed grew at 8%, so well above global market growth. And as we said we had a little bit of benefit additionally in France, but most of that is starting go away and we're starting to get back towards those organic growth rates in Europe, Asia and others. So I think it's a natural return to market growth and then some additional market share taking for those who still are switching over to the cloud-connected devices in France and to a much lesser extent in Japan. But, look, the real benefit, as I was alluding to in one of the earlier questions, is not just selling that one device and then resupplying that every three or five years based on patient upgrade or warranty models. It's really around the fact that a patient now on a cloud-connected device in a region where cloud connectivity is used a lot, like France, Japan and obviously, the U.S., is something that starts to drive really strong and sustainable mask and accessory resupply. And so that's really the benefit that we're sort of highlighting with these great telemonitoring tools. Yes, there's some great one to two quarter benefits in device sales, but most importantly, it's a patient whose life has changed. And therefore, when you ask them, text them, call them, do you want a new mask three months or four months or six months later, they say, yes, because you're contacting them the way they wanted and how they wanted and they're getting part of that resupply program. So it's good for everyone, then the payer because patients go in hospital, the patient because they're getting great care, and the provider because they're able to provide that extra mask and obviously for ResMed.

Great. Thanks for the color.

Thomas Yeo is on the line with Goldman Sachs, Sydney, with a question.

Hi. Thanks for taking my question. The first question is, in regards to the recent CMS proposed rules, could you help us understand a few of the potential changes that is happening? Like, how is a lead product being defined? And also, what do you expect the change in proposed rules to have on the different mask categories?

So I'll hand that to Dave Pendarvis, who is with me here in Munich, regarding reimbursement CMS.

Yeah. Thanks for the question. We're pleased with the CMS proposal. As Mick mentioned earlier, we think it's going to be overall good for the industry. And the first thing I would point to there is that they've moved to the clearing price, establishing the reimbursed amount. And that in and of itself is something the industry has been asking for quite a while, and so that should be strong. There is some discussion in there about lead product and categories. And so it remains to be seen how much of that will come out in the final rule and how much of it will be handled by sub-regulatory guidance down the road, but we do think that if sleep is a separate category from oxygen, that's a good thing for our sleep business. Remains to be seen whether non-invasive ventilation would be a different category or combined with others. So that will have to come out in the final rules and guidance thereafter, but we do think that our focus on sleep overall is a good thing. And as a overall measure, what we really like about this is that the industry has been talking for some time about the need for change in the way this competitive bidding structure was operating. And CMS has responded. You have to give them credit for listening to the industry, working with the industry, and not just us but others throughout the whole industry have been participating in this process. So we have to give credit where credit is due. Now, there's still some things we'd like to see on top of that. I mean, the fact that in some of the non-competitive bid areas, a town like Niland, California, which is near the Salton Sea, or a small county that's outside of Chicago is viewed as no uplift, not really considered a rural area, we think that's an area where CMS ought to step in and provide some additional reimbursement. So there's always room to improve. The industry is still looking for improvement here, but overall, we think it's a good positive development.

Yeah. Thanks. And just a follow-up and kind of to switch topic as well, what's the progress being made in COPD? We have seen some supportive studies lately. Could you outline which of those are underway today and what you expect to be the most impactful and when do you expect them to read out?

Yeah. I'll hand that question to Rob Douglas, our Chief Operating Officer, who is in San Diego.

Yeah. Thanks, Thomas. So, yeah, there's been quite a few studies on and some of them were actually previewed in posters at ATS, but there were studies really looking at various sectors. The main one we've been talking about is the HOT-HMV study, which showed the benefit in terms of keeping people out of hospital by adding NIV on to oxygen. And then, as Mick mentioned earlier, that really had an economic study done to it, which showed a very significant cost reduction per quality of life here that you almost never see in treatment. So that should be really powerful. Other studies are ongoing. There were studies looking at really getting at identifying, which patients are going to benefit more and understanding how to get out and predict the patients that have high CO2 levels, which is really the patients that benefit the most from the addition of NIV treatment. It's a very fertile ground. Around the world, standards of care are still quite varied and there's a lot of opportunity for those to be normalized as these studies bear fruit, both from the benefit of oxygen, integrated or not with NIV therapy and then models of using them. There's a lot coming.

Thank you.

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

Thank you, and good morning or good evening. I have a question on AllCall connect. I'm just wondering, Mick, if you give us a bit of granularity around that. Like, how broadly is it adopted? How much of a driver in a broad – sort of the good resupply number as a start?

Yeah. So, Sean, look, there's a portfolio of offerings in resupply. Within the Brightree Core, we had Brightree Connect and then we had our ResMed ReSupply model and then we had added onto that, which are both sort of automated, if you like, cloud-based AI type algorithms, ML type algorithms to contact patients. In addition, we added AllCall Connect, which is live humans as well as automated levels. And so, now we've got a portfolio of live and automated calling for people. And I'll go back to my comments a little earlier that it's really about finding the best solution for a patient as they need it. And AllCall is really just part of that portfolio. We don't break out how much is from the Brightree, how much is from the ResMed, which is for users of ResMed beyond just Brightree users, and how much is part of the AllCall. But what I can tell you is they're really well-coordinated on the back end and there's a skin, so it's pretty much invisible to the frontend users and patients won't actually know what back end system they're using. The others say, wow, ResMed is reaching out to me or we may even do it on behalf of DME A or B (00:56:01) and reach out to the patient. So, really, we're seeing a good growth across the portfolio of those.

Okay. Thanks, Mick. And just one quick follow-up just to check a number. On HEALTHCAREfirst, there was no contribution in the current fiscal year and there was about trailing 12-month revenue of $30 million, if I heard correctly.

Yeah. The trailing 12-month is around $29 million, $30 million. Brett, no real material contribution, correct?

No, we closed that sales (00:56:29) in the quarter and, Sean, I think, it was on 9th of July. So just had it for three weeks. So, certainly no impact in Q4, but obviously that's a – we think it's a really good growth area. So we've got good expectations at both the Brightree and the HEALTHCAREfirst offerings in that space.

Perfect. Thank you, gentlemen.

Thanks, Sean.

John Deakin-Bell from Citigroup is online with a question.

Good morning. I was just wanting to turn to Brightree for a moment. Could you just give us a sense – obviously, strong growth numbers, a sense of the growth between new customers and existing customers spending more money with you? What's the rough split?

Yeah. John, we don't go into that much detail on it. Jim, who runs our global sleep business probably has a little more color that he can provide qualitatively. We're not sort of going to breakout per user per month type growth that we have as customers grow and/or take share and/or acquire other customers. But, Jim, do you want to provide any further color on Brightree and how we achieved those strong 12% growth numbers in the quarter.

Sure, Mick, and thanks, John, for your question. Without getting into granular detail, we're getting growth on both sides of that equation and not just out of Brightree, of course, but out of other offerings in the SaaS portfolio. So it's pretty balanced growth.

Okay. Thank you. Maybe just a change text, you called out early in the call the prevalence of sleep apnea. What was the actual severe number? Do you have that separately because obviously it's quite important?

Yeah. Look, I just want to do some – I actually don't know if that study does break it out. And if so, we're really happy to share that with you, John. But what doctors call mild is an AHI or suffocation index of 5 to 14. So with 14, that's approximately just over every four minutes of sleep that you suffocate for 10-plus, minimum of 10 seconds. Every four minutes of sleep, 10 seconds suffocation, that's called mild. And if you talk about moderate, what doctors call moderate sleep apnea, which is an AHI of 15 to 30, and you're pushing 30, that's every two minutes now, you're suffocating for 10 seconds or more. That's called moderate. So, I think there's a difference between what doctors call moderate sleep apnea. And if you talk to a patient, say, hey, you're suffocating every two minutes, but don't worry, your doctor says that's moderate, but you're suffocating for every four minutes, but don't worry, your doctor says that's mild. This is what it is. To be called severe, you have to suffocate every – less than every 120 seconds of sleep for more than 10 seconds. You're starting to get close to 10% of your time in suffocation mode. So I don't know, look, I'm a mild sleep apnea sufferer and I use this device. Obviously, I'm passionate it as CEO of the company. But many people with mild sleep apnea are seeking treatment and don't want to suffocate. You don't wait till you really overweight before you start exercising, why would you wait until your suffocation index is every 110 seconds. But anyway, I'll hand over to Rob, if he wants to handle any further information about the severe element of that study.

Yeah. Just one other bit of information, John, the reimbursement programs around the world would – may distinguish between mild and severe. And so in many U.S. models, you need a comorbidity and mild to get reimbursed, which is most people do have comorbidity, so it's very common, or just having it moderate or mild get you into it. So that's really why we focus more on the difference between mild and moderate versus severe.

Understand. That's very helpful. Thank you.

Thanks for your questions, John.

We have Andrew Goodsall from MST Marquee on the line with a question.

Thanks very much. Lucky, last, I think quickly on ASP, I know you've sort of talked about in masks business a bit, but you did talk about ASP declines. Was that regionally based, was it a European or U.S. feature?

Yeah. We don't get into details on ASP, but it was pretty steady changes globally, Andrew. So, nothing really different from the last eight to 12 quarters we've been talking about this.

Okay.

Pretty steady.

Okay. So, no particular region where you're feeling competitive or other sort of changing pressure?

No, look, we've been going through a lot of details about U.S. reimbursement, how – actually, there were some really good news on the competitive bidding front in terms of where they came to in this quarter. So I think we're seeing pretty steady levels of ASPs in terms of those decline rates being steady over the last eight, 12 quarters. There's really nothing dramatic happening there.

And a quick on Narval. In France, we're hearing that's doing quite well. Just I guess any color on how that's going?

Yeah. Look, I'm here over with the European team and I got to tell you, there's a lot of passion for our 3D printed medical device there with the Narval. I mean it's just a fantastic mandibular repositioning device and the reimbursement actually increased by over 30% in France with some recent changes for Narval. And it's a really well-run operation We have the 3D printers in Lyon. We have incredibly strong sales team and really aware sleep and dental sleep specialists and good relationships between the pulmonary and dental sleep medicine specialists. So, yeah, we are seeing strong growth. We don't break that out, obviously, by the numbers there, Andrew, but if you're doing your channel checks, I think you'll find that ResMed is not only the number one supplier of CPAP, APAP and bilevel for sleep apnea. They're also the number one supplier of MRDs for treatment of sleep apnea within France.

Perfect. Thank you very much.

Thanks Andrew.

We are now at the one hour mark. So I'll turn the call back over to Mr. Mick Ferrell.

Great. Thanks, Tim. And look, as we close the call here, I want to once again thank the 6,000 strong ResMed team in 120 countries for their continued dedication, focus and commitment to our growth strategy and our operating excellence initiatives. Throughout the entire fiscal year 2018, you've helped us deliver strong revenue growth and increased our operating leverage. And as we exit fiscal 2018 and we're now here in a positive trajectory as we start fiscal 2019. We remain focused as a team on our future pipeline of pretty amazing products and software solutions that change patients' lives, to improve patients' lives and benefit all of our customers, the physicians, the payers, the providers, and of course, the patients. Thanks for your time today this afternoon, this evening, and we look forward to talking to you again at the end of our first quarter in about 90 days. Amy?

Great. Thank you again for joining us today. If you have additional questions, please feel free to contact me directly. And as I said at the beginning of the call, the webcast replay along with our earnings release and updated investor presentation will be available on our website at investor.resmed.com. Tim, you may go ahead and close the call.

This concludes ResMed's fourth quarter of fiscal year 2018 earnings live webcast. You may now disconnect.