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Hill-Rom (HRC)

Participants
John Groetelaars President and CEO
Barbara Bodem CFO
Mary Ladone SVP, Corporate Development, Strategy and IR
Matt Taylor UBS
David Lewis Morgan Stanley
Rick Wise Stifel
Larry Keusch Raymond James
Bob Hopkins Bank of America Merrill Lynch
Kristen Stewart Barclays
Matthew Mishan KeyBanc Capital Markets
Call transcript
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Operator

Good morning and welcome to Hill-Rom's Fiscal Third Quarter 2019 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. At the end of management's prepared remarks, we will conduct a question-and-answer session. [Operator Instructions].

As a reminder, this call is being recorded by Hill-Rom and is copyrighted material. rebroadcast, without recorded, written be cannot or Hill-Rom's transmitted consent. It

disconnect have time. any you at objections, If please this

I would Corporate now begin. to Investor Ms. like Ms. to turn Kay Relations. Senior the Ladone, Vice you President, Ladone, Development, and Mary Strategy may call over

Mary Ladone

morning, us our quarter for fiscal joining call. earnings conference thanks and third Good for XXXX

Joining of Bodem, Barbara Officer. Hill-Rom; are Chief Groetelaars, and President John today and me Chief Officer Executive Financial

that certain that started, refer let cause subject differ to by me begin to contained remarks are to could SEC prepared presentation actual morning differ that assumptions, Please to and release are materially. press get our reminding those factors and our other described. detail results this could forward-looking you factors cause today's more we statements uncertainties, and filings this in Before results statements materially actual for from risk concerning risks,

will and in In release financial today's Reconciliations measures non-GAAP included are used. measures GAAP addition, call, our this financial morning. be between issued on earnings non-GAAP

know, this you our year new under as for results first for financial and comparisons standard to prior XXX as well our on quarter, on an ASC current guidance. standard financial periods, retrospective the our beginning will a fiscal the allow modified will basis accounting recognition morning be which this new The on comparability apples-to-apples focus our revenue commentary basis. we of adopted with As XXXX

over turn now call me to let the introduction, that John. With

John Groetelaars

of innovations fifth solid revenue quarter with and growth profitability the Mary margins morning, Thanks, delivered new and mid-single of improved Kay. Good production core digit Hill-Rom strength consecutive execution. everyone. gross a on

growth divestitures growth-oriented of through We’re actively portfolio reshaping acquisitions businesses. low and the selected

during that above XXXX. with has quarter financial deliver on the and each bottom have team been both determination to Hill-Rom line top The fiscal been line expectations performing results

we three growth and by delivered all core of product businesses across QX, new revenue driven growth X% positive momentum. In

XX% and of record XXX of operating execution basis above gross achieving margin a points. adjusted operational margin, to led new expansion disciplined level Our

our provided Adjusted quarter record in flexibility increased double-digit to $X.XX financial has objectives. acquisitions growth. and order share both earnings year, consecutive XXth initiatives per long-term prior track the our deliver earnings of growth of short-term our strong in diluted to reinvest sustainably of delivering key our performance XX% and versus Overall,

Our driver. strategy first category our priority four are and patients, and to priorities and continue value shareholders. growth new leadership accelerate to remains a strategic significant products to be caregivers Innovation delivering

so year million product on New $XXX revenue million more expectations track of $XXX for than XXXX. is far this exceed our of to

marketing to this driving incremental Vision expansion, the products growth. gains share basis to across this for revenue. Clearance account few. are and products Integrated Airway of Monarch XX% Table are of XXX which Motion new System, three points portfolio name key Supporting and our Our performance a all Care businesses, top eight line

growth recently to growth that to keep RetinaVue including momentum will going have above products weighted EarlySense, products continue several confident new WATCHCARE the market these remain forward. going We launched our X% rate now Imager. We drive new in XXX X% order average our durable and to

in this in on commercial we investments, Our China. of second encouraged And our still is far mid-single capabilities priority are so we’re including markets by execution. year, stages our nice the of Asia focused digit while penetrating early America in emerging improving growth and Pacific and Latin progress

weaker-than-expected refer from which and to will in performance However, we going now forward. MEATI, was Europe not offset this as on EMEA the strength to enough

the EMEA the region. results in primarily quarter, third expected international our project countries in transient select including performance overall headwinds, reflect and budget better capital delays While we approvals within

as positive flattened reports growth optimistic that a will am organization quarter leadership improved our business under result now directly Our to of EMEA to into and comparisons. fourth our international is easier funnel and I new a me. return that structure in visibility the team

our we actions portfolio through taking transform very are initiatives. we M&A our priority, and to Turning with third the encouraged are to portfolio optimization

Our further portfolio the efforts digit driving growth. at mid-single line sustainable our here diversifying top enhancing and category directed leadership, are

closed orders this The acquisition. growing Voalte is of backlog. Earlier exceeding leader a record our mobile and strong generating double-digit Voalte growth, pioneer on growing in communications track with the is track fast $X quarter, consistent expectations an is in growth durable, and billion revenue a we Voalte revenue healthcare and record with a market. attractive integration

over contributed Combining the to connected our QX. bed position Voalte closes just on solutions loop smartphone with builds clinical and from points smart Hill-Rom’s to XXX growth Voalte leadership to business solutions. of our basis workflow strengthen

This nasal vertically cannula of growth patented disruptive differentiated manufacturer acquisition patient and improved announced a therapy acquisition of Technologies, the Breathe technology provides our integrated developer this of and exciting The morning, leverages we platform supports respiratory model. mobility. an that that a commercial

broad range critical-care of and underpenetrated home The a with COPD, in system conditions ventilation growth company’s System mechanical LifeXXXX disease settings, Ventilation reimbursable a potential. volume-control, is an and for undertreated the area non-invasive including tremendous

pound home. wearable freedom inside weighs or of range providing The outside X is only Ventilator and patients of the

transaction expect the transaction’s quarter. fiscal expected this close fourth The the dilutive year increasingly modestly to during and We accretive first during be to thereafter.

plan and attractive are margin and capital financial strategic to examples higher towards categories Voalte and deploy to a Breathe adhering of acquisitions returns. approach strategically rigorous our of with we excellent to recent disciplined criteria higher growth, The how generate

and decision focus business. the can a capital I sale now and ability our completed to our towards announce business consumables headwind of resources have strategic our today that Hill-Rom. This underscores future growth was surgical a exit our also a divestiture to we to that aspirations strengthens our

business basis. perspective, in $XXX approximately approximately adjusted a to and was per financial pro revenue this million of generate contribute $X.XX on a expected annual From share earnings forma

a recast account to the does when earnings and be divestiture. reflect and operation, As treatment cannot future investors this analysts projections. take into this divestiture quality ensure the historical discontinued We modeling our not as results for to sales want that

execution to divestiture Therefore, M&A the absorb well in surgical accelerated revenue us earnings All this to in share. has incremental strong considered, the positioned the that we and to dilution related $X.XX approximately quarter we the activity, of our our are very approximately diluted of fourth level business. operational pleased to guidance X% of raising our $X.XX guidance for adjusted per our growth range consumables reaffirming core $X.XX year and are particular, of

vision them caregivers. team execute pursuit spirit engaged improving our strategy want thank of winning and is their Hill-Rom our Our I and and passionate and new branding to about in patients care, to advancing determination and and enhancing connected for for lives of

the Barb. now to With turn me that, call over let

Barbara Bodem

and Thanks, John, good morning, everyone.

to results for adjusted comparable use to to focus year basis schedules will XXX. period commentary posted quarter our the Our prior on this a follow morning third ASC Please site supplemental on Web along. the

accounting and other ASC XXX, of per revenue integration GAAP under diluted quarter, and third to fiscal $X.XX we intangible share. These costs results amortization, the related earnings items standard reported special special acquisition include For after-tax charges.

share investments $X.XX of prior strategic as growth, products to reflect from per $X.XX per year, $X.XX over growth. accelerated and earnings well These drive Adjusted core advanced diluted guidance results revenue range expansion diluted margin XX% to of share. exceeding future as our contribution continued new

to me walk outlook. with the financial turning before P&L our revenue. let Now, Starting through

X% a X%. exceeding Voalte basis our million, consecutive X% revenue XXX $XXX expectations. was and revenue revenue it X% range just to basis. Core basis for points the exceeded currency increased guidance of a constant quarter, quarter, contributed third fiscal grew the on X% our over reported with on For third that

quarter. on increased in revenue third X% basis Domestic core a the

care We respiratory systems, continue to surgical and benefit clinical vision, multiple growth from with med-surg including across workflow double-digit solutions, bed portfolio diversification product categories, tables.

with mid-single international Overall, better stages sustainable revenue have Asia declined core to growth. stabilized growth show digit in as we Latin our operations America are commercial the and early foundation X%. Pacific and setting a for improvement of continued

Front was this primarily in EMEA and timing than in performance highlighted, expected not performance of driven the capital to John offset Care Line lower enough by business. the projects the As decline

the will X% a achieved consistent business revenue address we currency core million advanced Reported I revenue all and increased what Moving Systems. year. Support on to of with growth have basis. segments, with Starting $XXX Patient revenue X%, on constant

and quarter our communications another the across diverse growth workflow of solutions contributions with positive mobile double-digit clinical solutions and This in platform. differentiated including beds, driven and performance connected services, U.S. Voalte, was our of new portfolio by from smart

Front well as as $XXX new primarily in driven million the of resulting contribution Revenue respiratory by growth and Care. Line products of physical to care to tools. vision strong increased assessment X% double-digit Moving diagnostic certain growth in and

U.S. $XXX of Vinci growth revenue year. Lastly, by Xi accelerated and Surgical of primarily for Table prior of record increased da Surgical the Motion revenue X% million System. Integrated was placements by driven Solutions the X% flat to Core

all three over of Now, performance the expanded our P&L. XX.X% year, and businesses. driven rest across improved gross record level the XXX Adjusted reached turning margin by points of the prior to basis of a

products than offset from and more expansion impact and margin product as mix, benefit items including new Voalte Gross well as improvements. operational positive continues to inflation. Collectively, of material these raw tariffs

R&D spending of in ongoing of addition SG&A investments, the to million the programs X% reflecting emerging in was for due and markets million, to timing commitment growth. Voalte. quarter investments Adjusted $XX drive and strategic innovation $XXX to future of our key the increased primarily

the of quarter impact bottom XXX quarter $X.XX third was had the XX.X%. last The a diluted margin third tax of in improvement per compared adjusted compensation current year. had reflecting prior was year. adjusted in the The quarter XX%. operating no for share earnings an basis adjusted Our Stock-based points XX.X%, the line rate but to $X.XX increased benefit

than strong Cash a $XXX million due lower Now, prior as XX% operations timing, higher of free than year. a XXXX, flow nine of flow totaled $XX was and last cash first on million, Capital for million expenditures $XXX turning $XX million months cash basis to from to advancing project of year-to-date flow. is XX%. the result the period

the the financial $XXX end leverage, approximately our June to returned ratio of repurchases the of shareholders X.Xx, terms and debt and share we XXXX to year. In EBITDA fiscal at through sheet million dividends during have balance was and

with conclude the me the Let guidance fiscal call of portion for the year. this our of remainder

our guidance We are EPS core reaffirming revenue expectations. our raising and

of operational continued diluted for share. M&A while strong offsetting financials, QX Our $X.XX performance per us strong recent positions for dilution activity approximately

specifically we X% revenue reported So year, approximately of consumables approximately full reflecting divestiture. growth X% impact expect of currency now constant growth the the of and surgical the for

growth of contribution includes the revenue of core which expect X%, now approximately Voalte. We

surgical will consumables impact is core period quarter XXXX Voalte, our is that Excluding immaterial. Please revenue of reported revenue divestiture, fourth prior of note in on beginning revenue guidance the closure the to as XXXX. be with expected core non-core be the growth The X%.

to $XXX XXXX in change million approximately other revenue no totals $XXX is which and There approximately XXXX. now non-core million in

prior-year reminder, non-core is components the both calculated guidance current and in core growth a excluding and As period. by the

Support driven core excess U.S. in grow we on to revenue X%, a By business performance. segment, of basis, robust Systems expect now Patient by

performance expected strong project Surgical QX. to in growth of continue approximately given We core Solutions X%,

Line to And Front finally, X% in driven be growth experienced by range, the we now the expect international X% growth Care year-to-date. challenging to more

the the are We also given the immaterial an from Breathe assuming of close. anticipated timing contribution acquisition,

standpoint, expect to basis and tariffs profitability mix and adjusted points, raw costs incremental From gross inflation. a more we with XX expand margin than material offset reflecting productivity associated improvements that approximately

increase recent M&A in transactions X% We expect R&D representing XX.X% continue of sales SG&A adjusted initiatives. of to approximately to and in investment of approximately growth low-single reflecting to XX% key and digits spending sales,

a to to margin adjusted points. XX XXX expansion we result, As operating continue of expect basis

of $X.XX reflects approximately diluted a per of shares. We guidance expense, of interest, tax to count to $XX continue rate approximately of million an other range share. share a This adjusted million, XX.X including $X.XX approximately and XX% expect

remains a perspective, our This transaction-related of expenditures cash prior of now outflows flow From the million guidance and $XXX operating approximately expectations. expect of including into of cash unchanged impact $XXX million. capital flow translates free which approximately $XX cash from million flow we

period fiscal on and the we basis quarter, a to prior comparable be reported expect the increase currency revenues basis. constant on year a For fourth to X%

positive approximately increase a contribution from international. to revenue core expect We including X%,

core revenue consumables this for adjusts guidance QX Our divestiture. surgical

business U.S. As Line highlighted, in we due previously year the Monarch comparisons the Front by we’ve expect a prior to the decline launch. also driven Care challenging

compensation. please significant per $X.XX of execution last items, a recent tax M&A, we dilution share. fourth special offsetting Also, that adjusted related to benefit operational excluding per stock-based we year’s quarter recorded recall diluted of strong $X.XX With expect diluted $X.XX to share executive from in earnings,

Thank you.

Now, over back John. I’ll the to turn call

John Groetelaars

the look Thanks, heading are on positioned and well summarize, growth XXXX into Barb. we of building To and beyond. quarter XXXX we momentum for to core store and our fourth forward

and our our to expand are connection markets, our on We performance investments products footprint to and our enhance an turning line performance our to with prioritize like continue underway R&D vision. and new drive to commitment emerging our a exciting top products advancing in ongoing international investments some significant be new care China, driver to

the divestiture the excited future recently helped And activity. the announced accretion. finally, for company earnings and Collectively, top about position recent line and sustained acquisitions really growth M&A were we

the call for So with open Q&A. up that, let’s

Operator

you. Thank

now available on site [Operator being for like will remind this We recorded Instructions]. begin at digital a session. participants and the will would be that I call to the days question-and-answer seven replay Web www.hillrom.com. Hill-Rom is

first of comes Taylor question question please. Our from UBS, Matt your

Matt Taylor

taking question. the you for Thank

So, acquisition seems this strategy. the able now brought care connected it Voalte strategies? new maybe Voalte expect It your and I talk and you’ve how acquisition of in to your in-house how just wanted about to with well. about that about more you integration is ask that be you going Can to grow fits like talk

John Groetelaars

bringing our terms in talent Sure. the prepared acquisition, in two Yes, organizations of so extremely we retention integration’s comments, said Voalte going key well Thanks, the together of Matt. the as seeing a contribution that business fit perspective, XXX On quarter. of cultural in the expect fourth organizations. the and the the in that points QX to we continue between side basis we’re

Voalte to our a the helps think context competitor, quote our from acquisition name. Hill-Rom’s put Voalte feeling base. what from saying, leaning a customer kind I I you towards read Nursing that of in customers Chief Officer who of I validates can summarize won’t the are over

expectations. activity, of exceeding of is our our pipeline Our orders pipeline

a our well. QX building in above We’re backlog actual performance our was as expectations and

organizations we our good continue in we’re the and as the the two about at the and fiscal to fit new more So optimistic very feel its sales formally strategic feeling performance together organization really bring momentum year. beginning of Matt, there, the that about ability

a example strategic complementary other and setting. DME model direct fit another in we In of current category very a sales means our to and large it we a home acute good terms of are to that Breathe announced respiratory commercial have care really our offering of of the think what acquisitions, both fits I in force is where is nice we product acquisition and today a

drive this that us nicely category So Technologies incremental really Breathe growth help there. fits will and

expectation on will to points Our add coming in Breathe of probably that year. XXX XX growth the is it basis

bringing into the family. So we’re excited about Hill-Rom Breathe

Matt Taylor

John. Thanks,

we do fruit your initiative your We’re and more end Can beef your also seeing of definitely talk of like are of with the some of seeing to the to And appetite kind strategic about up deals. do more you deals business? BT this? divestitures surgical

John Groetelaars

question. good Yes,

me second and first. end Let the is non-core, at it question core, core When probably the non-core answer comes sunset to best to way of we the the it answer do intend XXXX. definition to

think put So businesses. of winding feel that’s signal we the with surgical definition done to always side. reshaping sunset, to good in fiscal on eye lines With that portfolio, our we’ll think product of down divesting context that we we the year our an divestiture next but end obviously good core, the pretty we’re I intention helps non-core consumables and our said, case the that in are in have at that a

deals, we powder have leverage, would a to assume dry of remaining. $XXX million to we As more X.Xx it relates do if capacity

We our activity to with of deals. tuck-in and have staffed have have lot team more up in businesses at capacity of to at because corporate here bolt-on we look Mary larger Kay’s volumes and of a each

So our pipeline good. looks

to couple last forward. the the on We’re continue four months a and look to ability pleased with of going strategy certainly these in execute this

Matt Taylor

a Thanks John. lot,

Operator

Lewis Your of is Stanley, next Morgan please. David question question from your

David Lewis

help you tremendous pieces broad strokes. know of if Great. XXXX could morning. I for in I early, moving Good there’s but Barb, it’s and a us just wonder number

just are up. and to XXXX? or looking just for X% expectations? those X% can for you as of tariffs, on earnings X.XX, year. XXXX? for year, quick strokes core a any one, on you more consensus do in comfortable divestiture, number on And earnings couple So a and activity X.XX Then minus or next kind provide something about your you X% I how maybe tax; Centrella broad feel core about relative think Barb, follow number Just for for next so have the like the that’s non-core you to Number of pieces John, just a maybe growth $X.XX, numbers based think type if on then,

John Groetelaars

question. can of year. this Dave, thanks in the I the context terms for answer Yes. of

yet for of is But areas XXX all products not quarter. adding strength, of basis points giving you points. if Voalte our think basis guidance We’re again businesses, year. of our next The new our once contributing acquisition another the about U.S. are XXX in

the in add to to XX Breathe XXX expect We basis future points.

less all overcome in out allowed the EMEA. particularly international, have things current So those performance to of year expected have than in us been,

– feel we on whole, good. really So feel we

at We’re Voalte. include the we’re of the in high above core, end when our initial guidance excluding and the acquisitions, of very acquisition you

So equally XXXX, we And that’s about job our at the feel very a opportunities. with performance good more other than XXXX. headwind slightly despite in performance in with to it’s as look some But of overcome challenges challenges. XXXX feel a international in good tailwind we our we that

Barbara Bodem

to said dilution the we right. not are as sure said, So going and on I pieces, think same the What we can in about I of There more year. giving John time. XXXX we a have dilution. following on about to everybody’s the worth QX you’re clarity $X.XX that, in lot moving next into page of $X.XX give guidance little at QX David, that What say this make we’ve is around in and can as are absolutely a is point

about that on of the forma you business $X.XX pro basis. basis, consumables surgical how forma we’ve divestiture talked is the about a back, back also pro As on a

that Now paying is benefit from a of down debt. net

a for current the $X.XX to closed a in of in down be it timing of full break quarter you and $X.XX That in dilution that this the for quarter. take about we’ve QX. nickel translates quarter, you about when if that’d So

In this about we’re have addition we’re which where to – we dilution this this additional in sorry, $X.XX that, to quarter Breathe quarter. [indiscernible] of thinking $X.XX quarter

with to next this the acquisition. look year to will anticipating year. on over And business, be next $X.XX regards basis the to a the $X.XX worth another dilution there $X.XX the we we for related As year for surgical Breathe of incremental $X.XX, consumables so are about quarterly then

David Lewis

that them And challenging helpful. headwinds you. more get you’re one that’s Okay, fourth maybe on jumping appears question it I’ll over focus but Centrella very for then, are to actually going quarter the product the in just next given you just harder have Centrella offsets on Then in is Centrella much. if isolate strength own, or comps year. you XXXX? headwind backlog. for so to Thanks But a in Centrella growth the John, its John, tailwind

John Groetelaars

Yes, expect what last tailwind a I QX growth this incremental year. be we’re to you year continues We for can say to QX. a is. it us overcome in and had it strong with like It really able

yet our haven’t of We plan at finalized level that detail.

momentum We’re right product We in that tremendous we middle that There’s doing in of existing number the certainly see the a of base. installed like the now. category.

XX% We’re we’re XXX,XXX some whole. more field, med-surg beds, out base are a we’re products but category of med-surg share importantly activating that gain we’re replenishing well the replenishment in and nowhere into in capturing penetrated that a existing the under as cycle

for we’ll don’t we see carry specifics this momentum that XXXX have on. So optimistic but

David Lewis

much. Thanks Great. so

Operator

please. Rick your Wise Your of is next question question from Stifel,

Rick Wise

John. morning, Good

And what if a so new fourth to things confident charged to that growth why I the is what right assume that EMEA XXXX. Let be bunch me so doing your should the comments into start will quickly quarter? about some the to we grow to it’s is it with and emerging setup going – have market your you, rate what you there? about issues some return how it of throw leadership, think them growth directly and The of a good I’ll maybe do off And or reporting in it’s it. with of

John Groetelaars

Yes, thanks for question. the

couple So areas let strength. of me of start with consistent a

growth growth China. Pac in LatAm recent got coming and Asia all of delivering digit period the year fact double-digit out and have mid-single been most we’ve in

to performance components in happen the orders with are So QX. QX largely timing going those In really was growth. pleased that in shifts by emerging we’re of market driven EMEA, of

and themselves it nice will our digit year-to-date get happen come growth to from just Some we’ll will and and our not for said, It XXXX, meeting for which back year. really team we’re a And kind about expected. last them QX. the in good into and happy over them out the want most Barb wasn’t low-single back performance feel with way we year. in played bleed this see happen with QX, but week, that with out of catch we’re international to we anticipating having growth in occur things QX ability European our of up That weak of I

stay performance together around categories. all success our performance that formula to with and efforts higher allow can there, product giving on have new leaders our that one direct And product few EMEA the strategic and consistency for working reporting synergistically changes ago, to that can consistency. priority and as better in and leadership areas particularly The region EMEA regions sure R&D can for revolves EMEA sure months into performance We’re line to a on of me making the two resources out we of me; EMEA. those all and launch focusing for direct for we made success on access international, focused of new international aligned team We Asia international matter. one and new Rick, and regions giving flatten efforts better are pull but and do product more to more can our all to for new make products discussed and get that quarter-over-quarter. we those the That’s organization of consistent we into certainly Pacific. We within our regional really some sight had, organizational executive improve with a

really to QX, of confident a the and drive things the be growth And we XXXX certainly than given international more QX clearly in tailwind from for because there’s with in about our 'XX, expect comps. given we international those So easier ability expected and QX performance lower particular. EMEA said, in shift would in to a in feel

Rick Wise

question think eight – the positive you of just momentum, second And maybe my steady products out compelling XX% very we great. for three? just That’s products these product opportunity these to products. do think with and over from going new XX, And most you that basis? a the us should XX last to are momentum RetinaVue back we from flow how Allyn to just know about or new key I XX, as of new seen more much. the new Maybe how these about highlighted don’t products, new flush you Imager the so we’ve a Are big products new just XXX but maybe key as months incremental eight here, think in of whether the us future important, about the those product is product about Welch you three rollout talk highlighted with the rollout depth? could help a Thank new the kind

John Groetelaars

WATCHCARE and the human is factor point some slick products terms to use terms a in video through an on kind site in point early learning of proof their pretty launched it. The RetinaVue Imager. Welch our user Yes, XXX use, to in friendly question. a flight and how image click. It’s nice lot recent more are that Thanks, it. that’s week ago device have and eyes. new three are both media Rick. most one click of Web Imager, Takes It’s of a it’s simple and The XXX of that new EarlySense, device we just with which the good social and a walks literally launches Great. RetinaVue Allyn

vision and expect continue quarter-over-quarter forward. we to think that’s growth screening game going vision in business see real So retinopathy to that diabetic a going be would care, consistently our for changer

reverse didn’t picks for this in experience recent moisture really of with in been enough, urine sure to the purpose WATCHCARE. in from to tell detection is or and bedsore. order sensitivity a avoid member been from week either in a ended who the after I Next, is bedsores. that kind hospital And device have can up fecal personal this you the incontinence a technology admitted incontinence. hospital family of on again is week the a This up hospital, had of a place, that

connect signs. with second respiratory patient. caregivers signal rate, heart rate actionable nice mobile them the finally, avoid alert real events blankets to to any ensure are bit has EarlySense, a vital WATCHCARE to two to then So can drive is change in offering this contact phone we’ve area purpose real-time the our monitors smartphone the that talked really got think proactive ecosystem and kind of those opportunity complications about We patient. twice surface doing and the a and incontinence deterioration their monitor EarlySense to the which quite is a and caregivers pending in of that per bed to for and without of to of digital in alerted be changing And the the on patient our of smart insights patient deterioration from those

So development WATCHCARE, up EarlySense really building sites development and KOL the market a and and evidence. and more developing lot reference

launch seen go we but the modest to So as we’ve certainly initially into see up I think in RetinaVue that would given that installed a have the customers. RetinaVue, year expectation be we we is as as we And of expect look the the product would ramp base this people XXXX more of significantly. a to that will the of rapid expectation product, using of much more it current base RetinaVue uptake those, our on XXX

that Rick. hope helps I you, So

basis context keep at have overall. growth greater XXX XXX for points growth. than new quarters five is think The of basis in products now other to have Hill-Rom I delivered thing for points been of one last couple

not confident of both discussed, that product and we’ve go-forward points in the growth given portfolio and and of discussed a we pipeline type on So basis up between somewhere we can basis. XXX what’s that keep our XXX feel certainly rate

Rick Wise

much. so you Thank Excellent.

Operator

please. is Your question James, Larry from Raymond your next question of Keusch

Larry Keusch

been Good really the has international everyone. years I issue fits been some a leadership come just and feel like is grower? chronic just issue, been have get issue to understand some you this company for factors and to to do in about, for terms it John, where want kind what a has back many really of thinking morning, what that guess of I’m to there, there starts, a but this but trying international it I you is going I and do about is and it of structural talked with be know to a think over you growth? local this the I you’re be consistent And should consistent can competitors I’m more

John Groetelaars

Larry, a Yes, fair it’s question.

me investments. opportunity there’s let think all, of here we making We talk have a First that we’re lot emerging untapped. about is where more markets. This growth

Latin was like And things that a at focus. Middle East. in and We given would that nice the we expect outlooks had the the Middle So year shaping in way better mass next year’s always growth for pretty East. this performance business had Asia Pac. We’ve America up are the critical initial

international international emerging Europe. established Australia we’re it number Relative majority whether markets markets; into probably markets X%. and So emerging a to in then the comes vast that’s that and bigger the probably to opportunity have fruit in and Canada, that’s total When China progressing begin business frankly to as our about or Asia LatAm. represents for established that days investments see in show XX% to to Pac one, quite how early will total, starting our the over of feel those Western And are portfolio the our more we’re indexed given good and markets impact. our portfolio,

heavily indexed there. we’re So

at med least significant and and do peers can the I established I see think gap I comments. as a between pretty as growth if look see across through results, U.S. growth at our international market sector, far those I tech sector, read the

an reflect but the focused industry-wide the that be our it’s also differential issue international reflective over the better Hill-Rom it has business out able in that and certainly in our the get brought better I’ve So on variability It’s we’ve business alone system five in not has certainly and is to model there past. and something of been the issue and that than getting ongoing explanation. would that I visibility predictability for the of say seems international development part to of a less around management last that the see really it and business into matter. been performance that’s we’re to quarters and our operating

led get we and in the to company. businesses back and kind R&D growing he just of making get to at he long really that fundamentally best So long-term from we joined all have how terms us And first down always Europe the around of get in And higher Europe, sure I the making significant team Francisco of the with the leadership sure XXXX. does international feel markets. place leader those a established performance. Hill-Rom have had the about growth come have He’s EMEA and portfolios And regions contributing into gets that alignment to the turn and new but Canal. is to strong in are strong a issues, international pretty when can leadership a looking and someone and between lead a back in it do former during difference Again, period pretty are we a think more having good we we GSS of Hill-Rom, level this in it us actually foundational EMEA that performance. makes been who’s The possibly leadership leader our we for business. those time,

the role expanded capacity, including him So we’re MEATI regional leadership and EMEA. our very back our former form to pleased in region to have

in confident this team him his around to XXXX. very turn performance the him leadership So around and and into

Larry Keusch

question. one to investing margin operating into you leverage back are in to then seems And at but that continue more expansion despite just could guys benefits business helpful. definitely focus point. all you that’s the me the clearly Okay, on gotten this on There that. and It other be you’ve that

as So year of of to again, should areas curious or calibrated get multiyear reinvestment that just sort a and to high the be thinking like how about we just level is trying out, more reinvestment that?

John Groetelaars

that to Larry. Thanks, turn I’ll over one Barb.

Barbara Bodem

areas that quite primary that. our efforts the expense and When Larry. XXXX, the We’ve offerings think you a Yes, I’m reinvestment think about would of happy when about to for area. into new in Hi, we preparing three bit buckets. be about talked total digital operating in space take

into well. going to as to then look going the is on that’s been we turned have commercial you’re perspective, So as QX be From talked work. last in And XXXX started the grow – an quarter we’ve M&A and we And in first of follow continue to will to and we SG&A that along our to continue that in driver XXXX. investment have investment really investment at see of a see now clearly the see also that’s that area starting the about that’s around and China. QX to

got investments So we’ve both. in

because drive can make on we businesses well And on digit strong sustainable the expansion in investments and line we’re up as believe we SG&A continue investments allowing are growth. affording comes such mid-digit line seeing the set R&D EPS Breathe we us that both that double to as the will as Breathe to margin we deliver well the gross in that As do top growth. have as sure to those

Larry Keusch

Thank Perfect. very much. you

Operator

from Hopkins is question please. Bob question next America, Your of of your Bank

Bob Hopkins

and Thanks good morning.

of quick clarifications. couple a Just

this revenue Definitely year grew that just on fiscal curious comments it. you the I’m for your guidance excluding for First the missed in I if X%. M&A core growth. sorry I’m quarter, third and heard

Just quarter fourth for guidance, are the the sure excluding what For deal from you’ve that. contribution revenue I growth guiding to your to announced? you any that quarter understand want fourth make core

Barbara Bodem

When X% that are in do Hi, will growth Voalte that points you quarter. It’s overall. the a of fourth guiding about anticipate revenue Bob. quarter, basis We to Barb. XXX look contribute we core at

Bob Hopkins

– contribution didn’t I’m close. deal I see to Okay. And from sorry, the when then you any expect other

Barbara Bodem

No.

that overall to either going or Breathe about did impact for dilutive, the line or the on revenue bottom maybe two not core talked a growth. So It’s the penny on mildly year have material revenue be is expected to picture. we material mention Breathe, our on top no our impact a the on when core but we line

Bob Hopkins

expect acquisition more you call the detail, little the for prospects talk Okay. for margin view a detail business, this love next, long deal this the term? it from the you how bit would prospects this And of course business, we talk little maybe just growth contribution then this years of a terms two next could in what more little this then on in of and a about over about how you can kind view

John Groetelaars

question. Bob, take Yes, the Thanks for I’ll that.

our getting excited this really about offering to We’re It’s product current into sales team. category. complementary and our current

short cannula go a always using it the to the episode to As if therapy. where significant year on appropriate. be level taken or wasn’t recent where going much product a it patients in being differentiated ER about are the in more at used mobile This makes I you and and had are comfortable. this is that then technology frequently tube, the really then cannula. I respiratory nasal and a coming And fact therapy that the this that it’s mask-based you with tolerated hose of and and to can the non-invasive ventilation this setting individual both really I picked in back growing can patient hospital in a COPD be and a nasal compliance without ones think is non-invasive through category the setting a ambulate a family this big makes member by other All a a home acute in home in is care difference. has to And mask be is tethered a and know, size, family and well X% differentiated this about unique what ability think really up

Bob, that coming will of optimistic, this of we’re incremental growth be years out this product many contribution offering. So

amount from base, ramp between million roughly XXX basis I of ramping get In XX around revenue can think drive In million they’re first the basis $XX today. and points up It’s growth hands, we we XX really first up. think we said thing current revenue we’re XX it’s about year, starting the not end of zero. this so our towards as we tremendous its we of months. as points somewhere towards a

Barbara Bodem

as for margin thing growth as of be criteria we’re well to the to the M&A, look is looking add acquisitions are we’ve for and talked top our different accretive to other about that Bob, of we what our I Breathe the no going looking and as that. to only would line is we’re any profile, at

a So drive help expect just it’s as that and operating line also but from only with is gross going margin Breathe Voalte top from growth going margin we perspective. an to to not

John Groetelaars

Bob. you Yes, know as you may recall and do, I

know, you our in is respiratory highest care business our business As company. margin whole our

fits Breathe that pretty of profile nicely. margin into gross the So

Bob Hopkins

quickly question. then that’s XXXX Okay, And helpful. just the really on back

of Thank just possible about growth, of year? to relative next to $X.XX dilution earnings $X.XX maybe this think you. offsets double dilution, talk got as are there your sort of You’ve normal that digit are that qualitatively you

Barbara Bodem

talked to giving how So, about XXXX next guidance we’re on Bob, not we’ve be going specific year.

of think product our the highlighting XXXX we reasons is our job I good great into new by core momentum John did a launches. being earlier why driven which at really the next all year, going feel business

before as is just for from divestiture the impact try the to be what first will that XX about easier remind be about very a consumables dilution think see comps think tailwind Voalte of the XXXX. far folks surgical added about months business we this real to from point time have to ability sort well your going clear in things we the the to really as Breathe as As this think international this, those year. has be provide That’s to we done all do can dilutive and projections that for be next as year is Breathe, of we the to What we of think going additions accretive. the about as think next you we us for insight as international, become we as acquisition And from we think year. then are about as modestly at turning about

John Groetelaars

And obviously you, – this. appreciate thank Bob and at level, a high really

wasn’t the our We’re like to margin business asset monetizing of growing aspired side of we the profile certainly Hill-Rom and where things. that rest that margin wasn’t on an us wasn’t really and for the P&L of be

frankly of the for line combination And here. So to I us doing yes, and some the what for monetize growth, is moves these landing that close the as assets – did with and XX our exact hours asset announced necessarily we’re the a that’s durable there it. monetize acquisition planned comes both redeploy that capital then way. items us dilution timing are think towards and the to But within growth-oriented in But provide that It top fortunate that Mary fortunate. having wasn’t almost Breathe day the job and themselves. divestiture of same of time of nice Kay is

the So right the think ongoing for for We us to going position forward. it’s the we and like growth make combination. company accretive portfolio moves

Bob Hopkins

you. Thank sense. makes Good,

Operator

question next of Barclays, please. Kristen Your from is Stewart question your

Kristen Stewart

I lines you talked would want look appreciate maybe about next just but guess with million from following year? something to like give looking you could the cost can something dilution monetize, on to the for program help that you be this that of of in XX always Bob’s implement savings a always commentary, you guidance, restructuring don’t or I in have on could to guess. preventing What fill that some XXXX

Barbara Bodem

Barb. Kristen. Hi, It’s

generate think we embarked to is So million $XX on a We’ve optimization. business benefit question the it’s plan great ongoing talked a around from a fact that multiyear that our with the we about over efforts going period. about the

XXXX One is of reasons absorb that future investments the But help in to We in line to million. some that results the still future one investing from fact well what able the growth. we’re our dilution way at QX investments – and be top that that are is why we and is said look against against is those of to tracking also while our are $XX fuel future are to seeing improvements the optimization. driving optimization have executing we

top focus, priorities deliver line. optimization of bottom have to growth. the the to sort other performance And of what turn on improved business continue we that at can the the continuing and as in we business as from investments look double drive well results making areas our mid-single line sure sustainable digit So we’re at going growth we while really look on to that around are that to the as

John Groetelaars

really double to question still your right. EPS and to the just to committed to Kristen, we Bob’s in be quarter, digit are clear, growth

growth drive As our ongoing the business. commitment that EPS still in double forward we to is look digit core

the provide looking durable look we So on ways to for. dilution, for that offset turning that investments growth we’re but at same will time that profile

Kristen Stewart

the at the versus on will apples-to-apples -- more have ultimately And will impact the a for the what and basis? you guys you all divestiture way excluding effectively you think of be XXXX it core at business normalized Okay. in of about looking basically looking XXXX

Barbara Bodem

is That correct.

John Groetelaars

Exactly right.

Kristen Stewart

it’s of Okay. when on within you this acquired? you thinking then growth, XXXX, for core Voalte And Breathe core sorry the since be Voalte core ultimately year guys though do give and core, even of hammer to is for will again guidance the other of In type should business for words, to you’re looking being those growth. is the that and Voalte levels you as Voalte inclusive additive? get like benefit to guess and Breathe think or LRP X% X% of to I Breathe we kind of

Barbara Bodem

So, in Kristen, sure a take there, couple of make I me in questions let them turn. so different

Voalte guidance and including core okay. as as be XXXX about about core revenue, Breathe revenue, and talk talk well in we will we our think about our we we As

be that will to of as on just what So be as we driving done is what would the on. is they’re and have part year portfolio underlying intention But part so clear far core our be of adding it. this that

how those transparency is around acquisitions So adding are there we’ll make to. that sure

that those. of the As that the the performance think and see that or to our we’re of think is helped, guidance new Voalte. And the ahead end we guidance that quarter the by by to second about over also being core we period, time yes, we and of particular, outlined, in XXXX to each of growth on plan of all gave are range you X% revenue coming XXXX and of towards that tracking of we great but that about product ahead long are X% track we the on ahead it’s metrics when

helps. time. good new or going about to And our that over acquisitions X% supplement, is will, so how this you performance I looking are feel the not where to and to is if we be We offset X%. pretty with hope that additive to get to

Kristen Stewart

Thank much. so Yes, it does. you

Mary Ladone

one you. We Thank have question. time for more

Operator

question Our your Matthew comes please. final Mishan KeyBanc, of from question

Matthew Mishan

like do And Thank that Volker process Breathe? your we what these you assets selling, some Voalte been be you they kind for in more should M&A confident change acquisitions, and of previous acquisitions, succeeding taking the questions. and How your since John, now of you’re like there? you’ve in you Aspen. were look guys at

John Groetelaars

Yes, it’s a great question.

growth differences. the One, categories with look And a in a overall think them. categories play strategy play of I but to and some innovation that can we size meaningful, at is where around we long-term is are within we couple want leadership. than category grow profile others, multiple to those key that faster in durable, large

or above of for sustained with for on So, think our ability of our Is portfolio? profile margin have is either target ownership? I fit that’s it in category additional number margin basis there talked segment the And about Does above to and profile important Does criteria in initially that market just over company? that I it underscores, above be the it a kind most acquisition growing – it can fit growth one, does leadership? above our is our inside the our time. what is and asset grow rates a

away mandate beds. to the under diversify diversify think business leadership, and the time at I prior was from hospital the to that

think done successfully that. I we’ve

assets, in that’s manufacturing Now commercial footprint. to supplement drive we and growth assets we’re that the utilize that or the time within categories in R&D it’s the whether have our to and company

and that and are at. today’s to acquisitions, we we’re a to be evaluations bolt-on then will and that challenging synergy the to – won’t really at profile five-year the our we type period. that a Not it all certainly in adjacencies environment. the on value of know looking looking ROIC those the but I transaction, drive those three lot larger get pretty in of lot allows in to So tuck-in as think can bring strategy This targets of to requirement us look

Matthew Mishan

consistently? why Care, because hasn’t played not out I’m a And the struggling more Front with Welch it. Perfect. capital penetration being I kind is sure Surgical quite international. Support in thought internationally that to just about was a Line more in and follow given I story then Patient volatility story But component up of on with Okay. Allyn that of can and I’m underpenetrated get what

John Groetelaars

it large being that all tough thanks Yes, I masked it’s in an that’s by masking because Care Middle you for business point Front sure was about growth last We the nice quarter, third we’ve a quarter. our really is customers of in that regions last Line Line the our great that bringing region, talking that a that those of earlier international of from up. internationally. some portfolio, Line are It’s some in got Care platform But Front comp on to East make to in so the example a came consistent the orders in Care like what business Front see are do year. making strategic due actually driving

Matthew Mishan

All right. Thanks, John.

John Groetelaars

Okay. Thank you. All right.

leadership close our our with just out a priorities category working. they’re playbook I Look, few me comments. and think really think around strategic Let I

five in We’re a digit seeing that our in consistent mid-single for performance row. quarters

and growth, core to Voalte, were $X.XX with pleased we that offsetting as to well the then this acquisitions able divestiture. X% including the came really that as guidance in of We’re quarter last raise dilution

QX. never in pleased and three growth Times have say our deals before our growth execute top positive and better with Hill-Rom. been I ability I’ll M&A in core. Super I’ve once to said in confident EPS our So really progress it and all our line sustaining from again. our at driving double-digit it guess guidance contribution against to And

much thank very call. So for you the

Operator

this today’s you conference Ladies concludes call and joining. for Inc. Hill-Rom Holdings, Thank gentlemen, with