Welcome to the Q2 Fiscal Year 2021 ResMed Earnings Conference Call. My name is Shentel, and I will be your operator for today's call. At this time, all participants are in listen-only mode. Please note that this conference is being recorded. I will now turn the call over to Amy Wakeham, Vice President of Investor Relations and Corporate Communications. Amy, you may begin.

Great. Thank you, Shentel. Good morning and good afternoon, everyone, and welcome to ResMed's second quarter fiscal year 2021 earnings call. Thanks for joining us. This call is being webcast live and the replay along with a copy of the earnings press release and our updated investor presentation will be available on the Investor Relations section of our corporate website later today. On the call today to discuss our quarterly results are our CEO, Mick Farrell; and CFO, Brett Sandercock. And several other members of management will be available during the Q&A following our prepared remarks. During today's call, we will discuss some non-GAAP measures. For a reconciliation of non-GAAP measures, please review the notes to today's earnings release and earnings presentation. 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, our actual results may differ. You are encouraged to review our SEC filings for a discussion of the risk factors that could cause our actual results to differ materially from any forward-looking statements made today. With that, I'd now turn the call over to Mick.

Thanks Amy. And thank you to all of our shareholders for joining us on today's call. On this our first call for calendar year 2021. We are happy to see the steady growth of production, distribution and availability of vaccines around the world. Clearly, we all want to see faster production and wider distribution so that people can be safe from COVID-19 and free to open up their communities and free to get back to their lives. We continue our work here at ResMed to support frontline respiratory therapists and pulmonary physicians, critical care physicians as well as providers, patients and Resmedian around the 140 plus countries that we operate in. In our core markets, the patient diagnosis trends in sleep apnea, COPD, and asthma are steadily increasing, modestly improving on the trends we saw in the September 2020 quarter. We're seeing this improvement of patient flow even as second and third waves come through northern winter hemisphere nations, because physicians and providers are adopting digital health, which enables patient engagement, even when people cannot or do not want to meet live and in person. In my remarks today, I will provide a high-level overview of our December Q2, FY21 business results and then hand the call over to Brett for further detail on the financials. I will also review progress towards our ResMed 2025 strategic goals, including execution highlights against our quarterly and annual operating priorities. Today, we have published and reported solid, high single digit growth in top line revenue and strong double-digit growth in both net operating profit as well as earnings per share. These results once again speak to our ResMed team's ability to work innovatively and deliver results, even when facing lower patient activity and little to no incremental benefit from ventilator sales. During the…

Right. Thanks Nick. Norman. In my remarks today, I will provide an overview of our results for the second quarter fiscal year 2021. And some remarks on our FY21 second half outlook. Unless noted, all comparisons are to the prior quarter. As Mick noted we had a strong quarter. Total revenue for the December quarter was $800 million, an increase of 9% than the prior quarter, and in constant currency terms revenue increased by 7%. Consistent with our predictions in Q1 earnings call, we derive minimal incremental revenue from COVID-19 related demand in the December quarter. Taking a closer look at our geographic distribution and excluding revenue from our software as a service business, our sales in US, Canada and Latin America countries were $427 million, an increase of 5%. Sales in Europe, Asia and other markets totaled $291 million; increases of 17% were in constant currency terms and increase of 10%. By product segment, US, Canada and Latin America device sales were $205 million, an increase in 1%. Masks and others sales were $222 million, an increase of 8%. In Europe, Asia and other markets, device sales total $188 million, an increase of 16%. When in constant currency terms a 10% increase. Masks and other sales in Europe, Asia and other markets were $93 million, an increase 18% when in constant currency terms and increase of 12%. Globally in constant currency term, device sales increased by 5%, while mask and other sales increased by 9%. Software as a service revenue for the second quarter was $92 million, an increase of 6%. On non-GAAP basis, SaaS revenue increased by 5%. During my commentary today, I will be referring to non-GAAP numbers. The non-GAAP measures adjust for the impact of amortization of acquired intangibles, restructuring expenses, the purchase accounting fair value…

Great, thank you, Brett. And thank you, Mick. Shentel, let's now go ahead and turn to the Q&A portion of the call.

[Operator Instructions] Your first question comes from Margaret Kaczor with William Blair.

Hey, good afternoon, and good morning to you, Mick. Thanks for taking the questions. And maybe the first one for me as to hit it off. You guys mentioned that there were negligible vent sales this quarter. So does that imply that this is a good revenue base for our model to grow off of for that coarsely business? And the reason I ask is, if it does, and then sales went from $40 million last quarter, none this quarter actually does imply that the business is doing quite well. So any details would be great. Thanks Mick.

Thanks for the question, Margaret. And yes, clearly in the December quarter, we had as we predicted sort of the minimis ventilator sales a little bit in Northern Europe, perhaps, but not material across the group. And as Brett said in the remarks just now from him, and I said as well, we expect no sort of COVID related than later sales throughout the rest of the fiscal year and beyond. People have enough in the hospitals, which is great. And so yes, look, it does start to form a good a good base, when you look at the core business of sleep apnea, COPD and asthma patient flow. I mean, as we said, the seasonality, usually from Q2, December quarter to Q3 March quarter relating to the US market and deductibles, and so on. But for the other 139 countries we're in and across the portfolio, so it's a good base to start to, to get that slow and steady improvement in the patient flow in this new digital health driven world, Margaret. Our patients going to primary care on zoom and telemedicine and getting referrals to their specialists and coming through the pipeline. And so we think it's better for the long term, but it is slowly and steadily coming back from advice. And yes, as we said, sort of in those numbers of the percentage flow patients as best we can see it. We saw improvement from September to December. And so those in takings up vent sales over that 90-day period as well.

Your next question comes from David Bailey of Macquarie.

Yes, thanks. Good morning, Mick and Brett. I'm just interested in actually what you've seen adherence levels over COVID-19, whether you've seen it pick up over the last sort of calendar year? And an extension of that any sort of relationship that you've been able to gather from in between resupply and adherence level? Any comments there would be interesting.

Yes, it's interesting. And we certainly think sort of modest, sort of single digit improvements in overall adherence, as we look at the big data, and we're actually doing a whole bunch of research on this to understand the sort of kinetics and dynamics of COVID-19 on the market. I think really early stage instead of March, April, people, there was a lot of things going around, and maybe using a CPAP would bring more virus in the room if you have other people room. So some fear and uncertainty and doubt in that early period. But I think that was all covered over by doctors saying listen, if you get treated for sleep apnea, it's actually preventative and improving your lungs and lower impact and severity of COVID-19. And again, look, there's so much clinical literature out there in terms of the general press, but through the scientific data, we are able to see people are adhering, those who are adhering more and sleeping more and using the devices more. And David, to your point, they're participating more in those resupply programs; they are seeing the importance of respiratory hygiene and respiratory health. And when they get a text response, or an app click and a chance to say yes, I want that new mask, I want that new tubing, I want that new humidifier, they putting it at much higher rates and getting closer to, frankly, what they should have always done, which is keeping respiratory hygiene at top of mind. So I would say modest improvements in overall adherence and more significant improvements in the probability that a person says, who is adherent says, I want to get that mask with that copay. I want to get that mask now to get resupply and in cash markets, same thing as well. So it's a really good question, David. It's a complex equation. We're working through all the variables, but yes, modest improvement in adherence and really good improvement in mask resupply as you saw in the numbers, as well as you saw in the health of the patients.

Your next question comes from Lyanne Harrison of Bank of America.

Good morning and congrats. Just a question. I'm trying to understand the change in these charts, I guess the recovery rate to create a few key markets do not appear to have yet improved much compared to the rates you quoted at the last result call. Can you give us some color on what you're hearing in relation to the pipeline in particular physicians' access in sleep testing, whether it being in the level at home to our key markets particularly as COVID cases staged in November and December?

Lyanne, it's a good question. And like David's, it's complex, because there's 140 countries all adopting digital health at different rates, and all having different sort of national rules around retail and restaurants as well as how you get back to life and back to health care as well. Healthcare has proved pretty resilient, I think, because people know, it's an essential industry. And the data that I shared earlier around truly life and death decision of using your CPAP or not for treating sleep apnea. I mean, it's incredible to have those data in the hands of our physicians worldwide as they are driving adherence. It's one thing to be doing a digital telemedicine call with a patient over a zoom or secure network, it's another one to say, listen, using this device will save your life, as well as improve your quality of life. And so the numbers of plus or minus 10% anyway, and that's why the ranges are so broad. But look, here the US key market is somewhere between 70 to 90% of pre-COVID patient flow as best we can measure it by at the link air usage by essence 10 sort of air solutions, activations of new devices and reactivations of resupply devices. And it's not perfect data. And it's different in all the 50 states just in the country that I'm living in here, between California, Massachusetts, and Florida, very different areas of opening up of their whole economies on local and state regulation. But that range is pretty broad, but it's pretty accurate in terms of the patient flow through. And that's why I think you've seen people really participating in masks and accessory resupply programs, but a slowdown, obviously a new patient starts. And as you pointed out the kinetics of it. Yes, true from the September quarter, I think we moved up sort of somewhere between 5% and 10% in each of the key markets, I talked about US, China and Germany as examples for Americas, Europe and Asia. So that's 5%, 10% 500 basis points, plus improvement in the quarter it's not this V shape, we're back to 100%, December 2019. Again, but it's a slow, steady sort of U-shaped improvement in the flow of patients, which we think does then over time flow through with all the systems and all the restrictions and portfolio of 140 countries through to patients getting set up and started on a lifetime of therapy on sleep apnea or COPD therapy.

Your next question comes from Saul Hadassin of UBS.

Good afternoon, Mick. Good morning, Brett. And say good afternoon Amy as well. Just a quick question on rest of the world sales, Mick, ex-US sales. So strong growth rates, both the costs for generators and masks, just wondering if you can give a bit more color, if sleep therapies are still sort of recovering back to you said 85% - 90% in some regions, just what else drove that very strong growth rate across those two product categories? And was there any tender timing for example, in Asia Pac that may be contributed to that strong growth rate?

Thank you, thanks for the question. So I'll have a little bit of a go at it. And then hand to Rob Douglas, our COO beside me here to provide more detail. Look as I said, there was some modest sales of ventilators in western and northern Europe during the quarter that'll flow into the devices number at plus 10% constant currency, and then the masks at plus 12% constant currency. Again, this is Europe, Asia, and the whole entire rest of worlds, and so we're talking 135 plus countries. And so, Rob, do you want to have a go at summarizing that is for sale singly.

Yes, let's just cross off the last point, Saul, I saw that there wasn't any kind of changes or issues in any of those markets, particularly. But across the board it was really interesting. We sort of had strong performance in many, many countries. Usually the countries are wary and some are strong and some aren't so on a given time, but it looked like there was pretty good strong performance. And we think the same underlying fundamentals that we've talked about, particularly in the US market. We're applying at different scales on these markets. And so in many small markets, we saw the uptake of that digital solutions being really strong. And in fact that underpinning that in our own technology base. In fact, actually a really good performance for that. Our technology team is meeting those digital requirements in each of the different countries as well. And then it was just really sort of patient demand for making sure their treatment is up to scratch. Really good, and we saw that dynamics across the board. The whole issue of the resurgence didn't seem to have quite effected that you might have thought because I think the health systems have learn that they actually didn't need to shut down everything in the health system and they knew what they can keep open. And so then the sort of the diagnosis processes and that kept going on. As Mick said before, things aren't yet back to fully open and normal. But the whole system's striving to get there. And additional things that have taken home sleep testing in some markets have been supportive as well. So it's really our whole suite of solutions is supporting a market that needs to treat these patients if it is going.

Your next question comes from Matthew Mishan of KeyBanc.

Hey, great, and thank you for taking the questions. Hey, Mick, just a quick one for me, just what is the pushback, what is the pushback from the payer community on closing the gap and reimbursement between at home sleep testing and lab-based tests?

Thanks for the question, Matt. I think the payer community and it varies. Take the example of the United States where it's probably 25% government reimbursement and 75% if you like in our sleep PAP but seems like sleep apnea sales of private payers, they were very supportive of both in lab and in home with apnea testing. And if you look at this country pre-COVID was probably about 45% home sleep apnea testing versus 55% in lab. I think that's moved up very significantly during COVID. Obviously, during the peak of the lockdowns it went very high. And it will probably level out somewhere in that 50%, 55%, 60% range of the diagnoses being home sleep apnea testing. Plus often have deltas of anything you can vary from $250 for home sleep apnea test and $750 - $800 for in lab test, just relative to the cost over there. Obviously, for the payer they would want if it's clinically equivalent patient and good sensitivity, specificity of the data and good patient outcomes, and patient satisfaction as well the payers care about, they would flow towards home sleep apnea testing, where they can go. But look I'll hand over David Pendarvis to add any further color on that dynamic.

Yes, Matt, at least in the US there actually are some pretty straightforward dollar investment and time requirements that go into reimbursement for a lot of payers. And the fact of the matter is, PHP equipments a lot more expensive to purchase, more expensive to operate, and it takes more time from both the physician and the facility. So that's what they're looking at more so than necessarily the incentives that are driven by the lower cost of home sleep testing. And the higher reimbursement rate of PSG. We certainly support good PSG when it's appropriate for the patient, and there's a lot of sleep labs that have invested a lot of capital, they invest a lot of time for their staff in that. And it's important that they be reimbursed adequately. So they both have their place in the market. But I think it's generally those sorts of things that go into their reimbursement decisions, not necessarily what outcomes are they trying to drive.

Your next question comes from the line of Andrew Goodsall of MST Macquarie.

Thanks very much for taking my question. Just looking at your margins, obviously, mask growth outpaced flow generated. So I can say it's a mixed effect. Could you sort of talk to that mix effect, but also expand on your comments on average selling price decline?

Brett, let's see it.

Yes, thank you. Sure. Thanks Mick. Thanks, Andrew. Yes, I mean, we had if you look through the year-on-year 20 basis point expansion. So it was kind of a moderate expansion. So those moving parts that I talked about and those impacts are pretty much or pretty small overall. The mix, pretty much they kind of had that strong mask crisis it's going to underpin that product mix. If you look that, year-on-year little bit of benefit from some effects but pretty minor. And then on ASPs, again, it's I'd characterize a pretty benign environment from a pricing perspective, and that's probably reflected in that pretty small movements in the gross margin year-on-year.

So the ASPs are pretty modest but you flagged that and -

Yes, [Multiple Speakers] historic context. I think it's a pretty benign environment for us relative to historical trends.

Your next question comes from the line of Sean Laaman of Morgan Stanley.

Thank you and good morning, Mick. I have a question on the exit of the PIC business. If I get this right, and I think I've got it simplistically right, but please correct me that you think you've got those mid stage COPD patients covered already through non-invasive events, and there's better reimbursement. And maybe there's a better clinical outcome. But we consider any sort of change in the thinking about how the funnel might operate to get to those patients and service and with non-invasive events with Propeller. Thanks Mick.

Yes, Sean, it's a great question. And yes, you're right, look at what Propeller that acquisition is about 24 months old so that what that allowed us to do is to get to patients much earlier in the COPD development cycle. It's really stage one, COPD, where you have that shortness of breath, climbing a flight of stairs, and you go to see the primary care diagnosis and find out that you do have some lung dysfunction. And this broad category called chronic obstructive pulmonary disease; you get put in that bucket. And there are many different types of therapies that the doctor can go to, but a lot of them are those pharmaceutical therapies up front. And those inhalers are not used as prescribed when they just given a prescription. The sign is when a pill is prescribed for high cholesterol or low blood pressure the adherence rates are very low in the general population 50% plus or minus. And with Propeller Health we are able to drive those adherence rates up double digits on a relative basis and drive to incredible adherence rates that the pharma industry just hasn't seen in respiratory medicine. And so Propeller technology is really exciting. It's really new. We have major global pharmaceutical companies partnering with us in major markets driving that. Early days but we think that allows us to get to stage one stage two patients in a very significant, scalable way to get them on that sort of end-to-end, digital health journey in COPD. As they progress to stage two, stage three, they sometimes get prescriptions for high-flow therapy, oxygen and ventilation, right. And so with it with non-invasive ventilation, and life support ventilation, which is really stage three, stage four, and in that sort of crossover phase from the pharmaceuticals to the ventilator, both oxygen and high flow therapy used. High-flow therapy is newer and more scaling. And we think more related to our core business and the core devices we make. And it allows us to treat the patients and take care of the patients. And so PSC just became an additional one that wasn't as important in that end-to-end journey, and certainly didn't have the sort of margin profile or the growth profile with the changes in reimbursement to allow us to have the same growth opportunity that we have in non-invasive ventilation and life support ventilation. So that's sort of it in a nutshell.

Your next question comes from Gretel Janu of Credit Suisse.

Thanks very much. Can you talk a bit more about the future pricing environment in the US? I know you said it's the benign currently. But and of course, we did have the announcement of 2 key DMEs merging could you expect great ASP price declines going forward in this benign environment that you're currently in?

Thanks for the question, Gretel. I'll hand that to the President of our Global Sleep and Respiratory Care Business. Jim, over to you.

Sorry, can you hear me now? It's a terrible way to enter the call. Thank you for the question. Thanks, Mick. I think that what we've seen this year is benign is maybe too softer word for price. But I'll go with benign. We've had a pretty stable pricing environment; I think in anticipation of - the market was anticipating the competitive bid rates. And then of course, competitive bid got delayed. And obviously, the Adapt Health acquisition of Arikare creates an even larger customer for us; they're very important customer for us. And we enjoy a very good relationship with them. I think both with that move. And then with ongoing trends into the year, we should see something that looks like more normal pricing environment, I think, in the second half of the fiscal year and going forward. And it'll be a little bit different by market as it always is, but I would expect it to be kind of back in a more normal trend.

Your next question comes from David Low of J.P. Morgan.

Thanks very much. Look, my question is on the software business, Mick, I think you commented that Brightree delivered most of the growth, MatrixCare et cetera, facing more of a challenge from the pandemic. Can you elaborate a little bit and how much growth did you see through Brightree? And what's driving that and I guess most importantly, can we maintain that growth in that part of the software business?

Yes, thanks for the question. David, and clearly Brightree had strong growth driven by the strength of our home medical equipment, customers and their ability to pivot their businesses to mask and resupply, and the great adoption of Brightree resupply sort of our core resupply software there. But also the Snap Technologies acquisition that we closed almost exactly a year ago, we were doing due diligence a year ago and closed it sort of later on during this March quarter. And so those two technologies have been very well adopted. But look, in addition to that our Brightree team it's a significant double-digit percent of their revenues in R&D, they've delivered a whole bunch of innovation, some COVID related management opportunities for their HME customers, as well as other innovative ways to grow their business. And so that's allowed the Brightree business to support HMEs and really help them survive and thrive in the early stages, and later stages of COVID-19. And it's great help to the industry. And I'm really proud that ResMed and Brightree are able to deliver that. On the MatrixCare side, yes, it's a tougher story, because the verticals that they operate in will more severely affected skilled nursing facility, census was down high double digits the peak of the crisis and still is down year-on-year on the number of patients in skilled nursing facility operations, and that impacts MatrixCare census rights and ability to grow. In addition, hospice affected similarly, on the other hand home health has been a growth light within the MatrixCare area, and the addition of our MatrixCare branded, but it's healthcare first Brightree and MatrixCare technologies, all combined under the MatrixCare brand has been growing really well. And the Glen and his team who is the VP who's driving that has…

Your next question comes from Michael Matson of Needham and Co.

Yes, thanks for taking my question. I guess I just wanted asked about the decision to exit the PSC market. You made some comments on that in the prepared remarks, but I was just wondering if you could elaborate on that a little bit. I guess what I'm wondering is, was this really a marketing issue? Do you think that the markets just not attractive or the margins on the products too low relative to their other products? Was the product that you had to kind of start with just not competitive enough? Or were there other reasons for exiting this market? I guess what I'm getting at was this a product issue or market issue or both?

Thanks for the question, Mike. Like I'll - I said, what I said in the prepared remarks and the question before, maybe I'll hand to Jim Hollings for any further detail. I mean we have the end-to-end play with all that we have in, our core capabilities of Propeller, high-flow therapy, non-invasive ventilation and lots of ventilation. But Jim any further detail you want to share from Mike.

Yes. Thanks, Mick. And thanks Mike. I think Mike, and for balancing sort of market versus our portfolios the way I would frame it, I think it's a little bit of both. So if you look at the market, we've thought for a long time that POCs should be reimbursed in a better way than a differential way because they create a lot of value for patients, they allow patients to be mobile and to get out about which is actually better for the care. But especially in the US market reimbursements always been upside down sort of unfavorable to POCs versus stationary. And we enter the category knowing that and we're innovating and we actually feel really good about the product. We had been developing the product, we had a market and the next generation that we were developing, but then you see how reimbursement is not changed and in fact has become less favorable and in relative terms of categories are just not that attractive, right. It doesn't have the same growth that it had five years ago when we enter it as a category, and that sort of thing. And then when you take that line of business and compare it to our overall portfolio in the sleep and respiratory care business, in relative terms, it's not nearly as strong a profile as the other opportunities, we have to invest in innovation, right? So we have a fantastic opportunity to continue to invest in Propeller or health, a fantastic opportunity, it's early days, but a fantastic opportunity to invest in high-flow therapy, which we think has a really interesting clinical profile and could be of great benefit to patients. And then, of course, as we continue to grow our digital offerings, our R&D portfolio there is just plenty of places for us to put R&D into other digital offerings in the expansion of our digital offerings. And so there's both the question of looking at the market and where that category had evolved since we'd entered with that acquisition, but also just looking at the range of opportunities we have in hand and making a decision to invest in things that we think afford more attractive, both for ResMed shareholders and also for patients.

Your next question comes from Chris Cooper of Goldman Sachs.

Hi, morning and afternoon. Thank you. Most of my near 10 questions have been asked. So just given there's been lots of references to high-flow therapy, today, I guess it would be remiss of me not to just ask you guys for a bit more of a sort of comprehensive update on where you're positioned. And what your strategy is there. I mean, did you guys have what you need in terms of current portfolio or are there some areas that might make sense from sort of a tuck-in perspective? And just generally, I guess your views on market growth and how you fit within that over the quarters and years ahead. I mean the references you made today are indicative clearly of how increasingly important this therapy looks and embrace this therapy markets but that just been keen to get some sense of quantification from you that would be helpful, if that would be possible. Thank you.

Thanks for your question, Chris. And look, it's a really exciting new area for us, obviously, with further down the road on Propeller Health and it's starting to move into stage one stage two area. During COVID-19, there were uses of high-flow therapy for patients with low oxygen and it's always been an area that has been looked at. We're interested in, ResMed's 90% of our revenues are in the home, we're really interested in home care, and the idea of high-flow therapy in the home we think has a lot of future. There's not a lot of reimbursement, in fact, virtually zero anywhere around the world. So it's a new development area. But we think, given some of the clinical data that are coming out, and some of the research we're doing with providers around the world, there is an opportunity to get patients out of the hospital and into the home with high-flow therapy treatment, and as a stepping stone on the pathway to our non-invasive ventilators and life support ventilators and in combination with our drug delivery system. So it's very early days, Chris, not at all material to our business, but it provides that sort of bridge portfolio, if you like, from Propeller through to the ventilation side, and we think was validated somewhat during COVID-19. And some clinical data that we are working with people with around the world says that as we look towards 2025, we think this will be a good part of our homecare portfolio of taking care of patients with high-flow therapy.

And just a very brief follow up, Mick. So for the homecare opportunity to really manifest in the way you expect do you need reimbursement to become more supportive? Or do you think that the current arrangements would allow that to happen?

No, Chris, I think we'd want to see our reimbursement models developed because that's how change happens, right? I mean, it's both the Hippocratic Oath and Adam Smith, if you like that are required to move some areas of healthcare. We've seen that in digital health where we had amazing solutions for over a decade in the field of liberating data to the cloud and driving up adherence and so on. But it was when we started to see models in the US and France and Japan and now Germany, where digital health started to be reimbursed because it is providing care that is of value and then reflecting that for the doctors and the providers and reimbursing in that. So I think reimbursement is a very important part of developing the home care market for high-flow therapy. So obviously, our research and partnerships with payers, providers and IDNs will be along those lines.

Your next question comes from Suraj Kalia of Oppenheimer.

Good afternoon. Can you hear me all right? Perfect. So Mick a couple of subpart questions related to COVID. Are you seeing any COVID related shifts in the mask replacement cycle now these transients are relatively stickier in nature, and if I could, has COVID identified any manufacturing, location re-optimization that would help you all realize incremental margin gains over the next few years? Thank you for taking my questions.

Thanks, Suraj. I'll hand the first question to Jim around replacement rates around masks during COVID and stickiness of that beyond. And then the second part around global manufacturing to Rob Douglas. So Jim you first?

Sure. Thanks, Mick thanks Suraj. On mask replacement, I think, what we've seen all year during the pandemic is a couple and we've talked about this, I think on this call, before we've seen a couple of dynamics. The first one is I do think patients are just more attentive to the idea that their equipment might be older, I think there's a greater sensitivity and awareness on behalf of patients to sort of have clean and disinfected reading apparatus, right? I mean, so I think that's driven a bit of incremental demand. And it's an open question as to how persistent and will be, but I would think it's going to be a bit more persistent. I think you'll see patients just more attentive to cleaning their masks and their tubes, and resupply and on a regular cadence. But that's speculation, and you certainly seen it this year. I don't know how long that will continue, or if it will increase and so on. I think the other thing that, of course, has been happening is in the markets where resupply is a benefit, which is largely the US market or other markets where it is for the provider, but the US market, I think HME customers have been, if anything more focused on driving the supply as a part of the business to patients. And so that's been a marriage of two trends where the HME wants to pay attention to the supply, as new patient starts have been slower, and the patient wants the equipment. And I think that behind that, in addition to behind that we've had increasing adoption of automated resupply platforms, including our offerings there. So I think all three of those trends have led to higher resupply overall. And I think it probably will persist, but it's very difficult to predict as all things COVID are.

Yes, and Suraj to your question on the manufacturing impact, the whole issue around COVID been very challenging for supply chains, and freight trains, all over the world, for many, many companies. And I think like many companies, we are carefully looking at the resilience of our supply chain through there. There are other issues going on around politics and trade relationships that we've got to work. Some of these are going to be beneficial as you talk about margins and some of the headwinds. And I think as we continue to scale our business, we should be able to run faster than those headwinds over time.

We are now at the end of the scheduled time for the call. So I'll turn the call back over to Mick Farrell.

Thanks, Shentel. And thanks again to all our shareholders for joining us on today's call. I'd like to once again take the opportunity to thank the 7,500 ResMedians, almost all of them are our shareholders for their dedication and hard work helping people sleep better, breathe better, and live better lives outside the hospital in over 140 countries. Thanks for all that you do today and every day. Thanks especially to our ResMed heroes on the front lines, production, distribution, tech service, customer service, talking to customers and delivering product every day. I look forward to talking with all of our stakeholders here again in 90 days. Thank you, Amy, over to you.

Great. Thanks, Mick. And thank you all again for joining us today. I know we weren't able to get to all the questions in the queue. So please don't hesitate to reach out to me directly if you've got anything further. And as previously mentioned, all the documents along with the transcript and a replay of today's call will be available on our website later today. Shentel, you may now go ahead and close out the call.

This concludes ResMed's second quarter of fiscal year 2021 earnings live webcast. You may now disconnect.