Hill-Rom (HRC)

Mary Kay Ladone SVP, Corporate Development, Strategy & IR
John Groetelaars President & CEO
Barbara Bodem CFO
Rick Wise Stifel
Larry Keusch Raymond James
Bob Hopkins Bank of America
David Lewis Morgan Stanley
Matt Taylor UBS
Matthew Mishan KeyBanc
Call transcript
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Good morning, and welcome to Hill-Rom's Fiscal Third Quarter 2020 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' transmitted consent. It

Mary disconnect have the time. Ms. Ms. Vice Ladone, any Investor you begin. Strategy at Corporate call Ladone, Development, President, objections, to you turn If Relations. to please this and Senior like I'd over may Kay now

Mary Kay Ladone

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

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

you more factors that let that including to today's Factors started, me cause reminding that information forward-looking Please risks, begin impact get actual any to from the presentation to could we refer cause described, statements actual press COVID-XX materially. this by are our to and uncertainties, results Before includes assumptions, pandemic. that results to subject for concerning those materially and release differ differ Risk other related filings could SEC

call, GAAP this be would today's release will issued like non-GAAP morning. measures financial on in earnings included mention the Relations to non-GAAP addition are also and In to website. our addition materials which financial between be I Reconciliations morning, used. These issued the Hill-Rom's release a our supplemental in that presentation, we have highlights on accessed can page performance. this of Investor posted press measures

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

John Groetelaars

manufacturing caregivers, fulfill you're to executed for passionate our extra team, And thank chain, ordinary. in mean It's supply outcomes our non-invasive sites And volume is and largest global that were well. committed, beds, securing Field involving employees the over Ramping five of and like team it, continuing normal excellent. smart to safety, have everyone. our mission of you and doing and of customer the Service I'd employees and call to this ramping up two start people, those the achieve. at as enhance to our unequivocally ventilators, the shipping to Thanks, delivered our our we ensuring rental needs, deserve shipping, times times a volume X,XXX name delivering I to group Hope ramping our called Mary today morning, normal meet we XX,XXX operational Hill-Rom. patients And mission-driven seven manufacturing do and Kay, up of joining overall call. employees workers team up X,XXX by in truly the extraordinary. We and out good here special which logistics and you dedicated, really approximately employees, for recognition. of and involved recognizing engage

ordinary, remote enhancing our our combination shareholders the and incredible actually the our a financial and for team. moved launched did extra long-term. I this, for portfolio value strength, commitment work-from-home, diverse exceptional customers, to new the to and as execution workers Next, The all and while we we our innovations We that and new OR the data pandemic, with all pipeline COVID. products to pivoted you, patients enough pivoting five vision supported for acquisitions, in and And patient advancing of our two integration. wasn't stop our R&D and launching over office our of underscores caregivers, website care connected execution, help and of said, closed company, dealing the during we It if doesn't programs towards both by there. accelerated Hill-Rom monitoring today,

includes the a to million durability XXX than contribution reflecting COVID-related that and we're care on record growth served. the other $XXX basis the proposition to pleased our Moving Core bottom and results value exceeded XX% the both strong the report highlights critical to related and of was we line. in from third approximately points more benefit products our markets category acquisition purchases. revenue Breathe leadership of of Core quarter, financial and our for revenue expectations top

and We adjusted we record With our gross increase cost be margin EPS of of share, $X.XX with management of posted significantly continue XX.X%. an a XX%. disciplined diluted ability to achieving margins, leverage, This in adjusted expense an per to expand XX.X%. of margin resulted pleased operating

to the to $XXX growth performance business, in turning from in resulting revenue this product increase accelerated new Before by of an again I'd products more highlight XX% like that quarter, than new million year-to-date, versus prior-year.

the a sets achieving proud how I'm very a for new objective revenue, the solid in beginning foundation product set key Importantly, of our of million $XXX fiscal at we this year. we release highlighted introduced products were and five morning. new care, remote surgical the the respiratory pivoted our workflow. recently this and press issued efforts in monitoring, These R&D in areas of

signs innovation. nearly demand time So was thermometry in individually, COVID-related surge of monitoring that due Geographically, through won't with plan through category performance representative strong international for accelerate our revenue future like growth core vital they given a growth to of how advancing we're are than ICU I together, note all and and walk other equipment. beds, XX% them limited leadership med-surg our and to to products

growth Solutions. Asia-Pacific, Front of As Latin Systems the by expected, EMEA, significant lower the of and across takes Patient puts America. X% XX% growth and diverse offset exception with reflects was the from led Surgical Line the double-digit portfolio. and regions revenues In in our including growth, with generated positive of Support Canada, way Care all U.S., which core growth

business let constant quarter performance Now, rate. at our on by touch third me currency

XX%. typical. was which as revenue and surge I by First, approximately for the global Patient revenue ICU early in demand growth beds, XX% total of XX company phase our driven expanded a capacity systems, company's the ICU than XX% the vast comprised full Core Support bed QX. of Systems in COVID was That's of med-surg a percentage points from higher hospitals The that of outbreak. majority revenue increased earlier benefit referenced and med-surg COVID of

remain revenue CapEx to anticipate the This demand significant transitory to was demand effect, and we that a which for commentary, surge approximately around peak March beds due of market and the bed comparisons quarters. growth the that difficult to in in that balanced pull-forward orders fourth Due during being we in was two Canada, was backlog the while beginning headwinds to month market as accumulated investment we resulted and of Global growth times funnel. pulled particularly our may both some top treat ICU long-term During and U.S., quarter, needs they U.S., remain We in the priority, our for worked a through the of prospects otherwise from by other nearly of mentioned, XX% April, is patients. non-COVID expansion, coming near-term the the expansion, now EMEA. ICU forward recent quarter the XX% COVID bed In prior-year. overcome estimate portfolio. bed encouraged That help for capacity about customer normalize. previously and demand we optimistic said, prioritization as level

are in which While other starting coding bed Care restrictions towards currently access accelerating complete in fiscal parts business, we revenue Communications, installations ease, is pre-COVID benefit anticipated are was headwinds the expect strong, funnel it partially and impacted hospital that offset activity XXXX. and building to of from levels, good to to that access robust is including was restrictions by we was a by news The installations.

non-invasive orders quarter third one-time to stockpiles. revenue Turning Line U.S. $XX million and approximately Front of in Care, increased support reflecting ventilator to international strength X%

visits across the screening. equipment occurring it pre-COVID vital and While exam towards the tools, and is diagnostic impact and the was levels offices physician cardiology, thermometry, physician offset now office U.S. lower we multiple portfolio. enough are including other monitoring vision recovery Front to and Line experienced of in strong demand of not our for signs patient on Care resuming areas Generally,

declined revenue project and last a due the XX% Solutions reflecting revenue declined delays COVID-XX. to consumables divestiture XX% timing year. Core Surgical Lastly, result surgical as of capital

more as to our can surgical imagine, With a I'd OR capital recovery to currently business some provide as the in perspectives now We are deferred results you seeing visibility projects, portfolio. by the additional gradual, trends backdrop, that like our be expect and to the being on across we're customers. as

regions we impacted Hill-Rom healthcare into in on The the as as intensity, and and that been pandemic, recall, largely to access market net will of of various our favorably well the acute been product depend have care evolving facilities. trends. for recovery have may shape that portions scope, in you of negatively impact the by business impacted, the and those have demand and As duration categories the

previously Given our visibility we're fluid, all these guidance. And elected final today, our we're variables our into and while have very issued of some as not we last guidance reinstating suspend fourth three to quarter, quarters fiscal year remains we situation now the quarter. through

share for adjusted growth Given to-date, of various confident results XXXX. in of of the including least X% earnings and adjusted evaluation of at our strength the scenarios we're projecting core diluted growth financial EPS per of $X.XX for QX, XX% revenue fiscal and

This confidence across includes following the is growth no product surge, puts various normalized categories based the across on from beds reflects continued and portfolio. ICU benefits the and wave. of of assumption a for multiple demand takes Our QX QX, outcomes in med-surg and second our

that recovery portfolio reduced In impacted delays, addition, our by and we access, areas visits. physician were negatively other of project anticipate across customer office

as the double-digit our pleased are these this we with We speed year. expect fiscal exit sequential of growth for and products recovery

summary, than connected more amid that diverse our a of our care a more of advantage and in transformation the solutions resilient important demonstrates company's So, portfolio environment, challenging into to-date and performance is ever.

Barb. strategy, our continue on and the priorities, strategic performance our will the growth over executing strategy and I'll driving turn oriented on call Looking leadership our in and to and come. ahead, operational we advancing to to M&A category years focus financial strong execution Thanks mission

Barbara Bodem

Thanks, John, and good morning, everyone.

are commenting Let closeout fiscal we before on me seeing walk through briefly P&L the as trends XXXX. we

as third contributions, million. optimization to constant in of XX%, a revenue one-time particularly lower the of and initiatives This of the drive quarter, primarily increased prior-year as million Adjusted product approximately lower which and $XXX XXX COVID-related Core purchases offset the $XXX the meetings, On as costs. manufacturing expanded a strategic and discretionary acquisition, $XX impact increased prior-year. $XXX the from level. reflects benefit revenue well future decreased well favorable record growth. than basis advanced versus benefit will Technologies service product than X%. SG&A mix, X% the COVID million more revenue investments expenses portfolio revenue points basis over currency like and from Adjusted global new spending, was peaked new spending marketing anniversary a certain XX.X%, For margin higher and million, more million reflecting as of of at from basis, X% $XXX as gross Breathe margin of R&D prior-year new points of to travel, purchases, comparable XXX product August.

$XX totaled quarter operating a and setting high to prior-year, strong improved watermark XXX basis adjusted per the in non-operating million expense margin the This expenses for diluted the earnings the third quarter other is the gross margin prior-year. the share increase an for year. into diluted was compared of XX%. $X.XX tax adjusted XX.X% from fiscal which adjusted and and for of of expansion Interest Given leverage, adjusted rate per translates fiscal $X.XX share, points XX%

last Surgical share the increased per Excluding impact $X.XX contributed diluted year, which diluted the adjusted Consumable earnings of per divestiture XX%. share

to software Capital basis expenditures on for first costs Now, flow, million, costs driven turning $XX to transformation was the than XXXX flow increase million, IT investments. from $XXX R&D and operations a months by the capitalized year-to-date $XX cash prior-year. a cash X% totaled million nine related higher prior-year, of to

As totaled million. a flow result, year-to-date $XXX free cash

XXXX. and returned share times. remains dividends at debt-to-EBITDA June sheet $XXX quarter balance shareholders of with million cash ended overall ratio repurchases and We our we to in strong. very the end and To-date financial $XXX Our fiscal through X.X position during million was the

the The since times been three Allyn time it's Welch first acquisition. below

covenants we We continue to well debt maturities debt material until no our and have XXXX. operate within

we refinancing given Lastly, up a facility necessary. any have efforts credit to last address $X.X needs to capital billion to revolving our as year, of access

John, the of on turning to and business me our continue expand before evolving Now, track businesses. within potential landscape the and current we over trends let three each call monitor as the to actively back geographically implications

of than XX% reflected portfolio, translated demand actual QX this growth XX% for category of peak mentioned, products. for John more into the of overall As which

respiratory beds we normalize, to backlog to category, we nearly double-digit demand products the Collectively fourth reflect ICU the products As revenue other revenues and as for XX% and of growth to expect year. in XXXX. this for category and be quarter current year, for med-surg growth the the thermometry, products from and second we like comparable benefits begins resulting second last to strong of a orders monitoring exit in XX% vital certain like no half do This for expect signs wave. visibility the QX

showing signs year revenue now our and of fiscal we improve. as revenue recovery show The as access our visits customer of to double-digit and other sequential XX% physician is office exit is expected growth

half revenue the decline by shared to portion continue you the This in of is expect line with quarter. this about We to second portfolio for last we XX%. with expectations

the and results scope the into Given remainder year. We uncertainty, of not of recommend we're also not evolving reinstating would guidance. our pandemic, the the ongoing recent fiscal projections nature for formal extrapolating

given of least adjusted expect $X.XX back over say with you full-year the John. disciplined updates share. to management However, that, of results And with you. that the and future. we we Thank turn at our additional today, per to We look call forward I'll providing can earnings in the diluted business,

John Groetelaars

diverse Barb. of remain Thanks In we of differentiated our closing, portfolio solutions. in the healthcare durability confident

the remain we the contribute meaningfully previously And benefits, As and value we growth heightened platforms attractive can COVID even believe proposition to performance. our in move beyond got environment. and stronger multi-year we've future post-COVID discussed the transitory demand,

better company instability. during last is than economic the Our today of positioned period

Our remains core investment thesis intact.

strength, generation, our Our the execution flow cash of strategic financial and is success. Hill-Rom sustained consistent for positioning priorities

the the an patients dedication our of As Hill-Rom we've I team. caregivers our we truly strong due and built to mentioned both the commitment and work is to serve amazing company, earlier, and Their is inspiration. foundation

let's create shareholders. Our objectives employees day. as we deliver our the life feel with up fortunate great such that, I and work With for a bring momentum build long-term our will on aspire Q&A. mission our around call the open for to to our together we continue to world to on and team value every


you. Thank

ahead. would website begin seven Wise this Rick at Hill-Rom will replay days call We go [Operator the will to with a remind first from and available like Please is the comes now I question-and-answer participants And Stifel. www.hillrom.com. Instructions]. session. that for on recorded being digital be question

Rick Wise

for performance the Good morning, quarter. excellent the John, thanks in the and and all and Barb detail

of start you So characterized But your play views you here. go-forward business? more couple the why quarter. many But questions. does growth expansion next How around us this years? it does of imagine your Maybe sort I'll this details for a out help market can to over What's how in mind? expansion. for this sustainable the support. growth? market due about maybe expansion John, argue question, that you market this I'm normalized understand might basis of part what And can to patient with on can mean give with intrigued might I as

John Groetelaars

Yes, the comes fact QX in thanks Rick. prepared PSS outlined When ICU med-surg our our both comments saw roughly, we expansion. we to and out what of it took and We we I and business, due incremental million about market time business, particular, bed portion in expansion. as to to it of think was said of detail a that market in beds, COVID-related lot $XXX in was half that and saw of

those one in and they $XX that of give of time. portion that same to over whole you much you country, customer about million in primarily that In that ICU. market was that med-surg new instance, will Canada, well was give example In And a big was can replacing a it instance. and a I'll position it and were I examples, said we in QX talked International. was beds support capacity. with sold ICU expansion. last beds, we the hurry. weren't pretty done well done They adding And just other hurry, not we So U.S. we in real was across that incremental category needs

in market But and prepared We've QX. talk need we'll so of why could to quickly to and adapt fact immediate and we're expansion need. that moment incredibly said I'm going when market quite and And recovery, We're So our panic try that it a to to that urgent that's part now. other in a as nonlinear me in frankly said this sure always for it always able I comments, a about that immediate an let to of was provide relates now. to urgent of this this. we Hill-Rom significant think expansion part need nonlinear respond address right expansion. led the I've And There deliver see and business. was to business seeing healthcare our comes it

temporary the question QX. outlook that become of an Both that portfolio. had for time, long-term lot a beds the bed expansion for to to transitional flex-up ability for at forward the outlook, sales market with we a those a ICU Now, feel same for your in we beds are and and But med-surg of have period. ICU think our pulled in it I long-term about good really

we're website bed promoting ICU that a In this fact, Centrella new Bed flexed be can a provide be see may to an our that capacity in become as you'll for transitory offering out to now that frame required. dark just offering up

we to issue. trend. we've And we're countries measured kind were happen. much Many this been Rick this. a is thoughtful more through approach capacity wave after around that to a require in It's well-positioned, think do just We the ICU clear So seeing app. really recognition the of more systems that benefit how from a healthcare you're various distinct global

see tremendous kind a very would of got high of years And the this feedback; market is ICU However, we're topic. bed we've of market. that I lot do of our say the confidence -- coming we've on research lot a expansion for going amount over to

Rick Wise

Can help I can backlog have I'm building obviously see us incremental Comm that of benefit turnaround But hear you Comm don't you what we Great. where give if and is. John, you kind in that numbers in we about access fiscal kind were I'm you're to to about didn't think period wanted Care any XXXX. about from impact very this the about could about that the the you the you positive maybe backlog But you XXXX? on business. excited a And contemplate talk you talked what not fiscal can I the surprised the as Care us mean, know of -- install.

John Groetelaars

severely remains in in Care conventional platform future so and the the bullish. into systems for QX. We install than as outlook a of wire access was rooms more impaired mobile and revenue Comm It's business Care call the nurse and constituted has to in really systems Yes, our relevant now is Comm recognize the result our offering, it been. and because

we As better. exited quarter, the things got

Our very we saw believe a nice play outlook trend as the to in a nice show in route. recovery continues We QX out QX.

acquisition hands-free optimistic this providers medical one of recovery dynamic is ones feature these in we're set quite because partly provide of provide we So the the communication activated as some with the the tools importance as system, nurse curve healthcare that with Medical materials and to the expanded voice device business new partnership a that continues set a our [ph], we vehicle mobile around come Volt the our steeper everything to to company forward. the that growth Excel as of feature of live quicker earlier relevance presentation back for going integration on and waveforms, now our comprehensive which that fairly mobile and call solution well building brings in mentioned

our that the of to importance it's is of it future. continues one businesses growth in So it. the the because And be brightest quicker long-term feels recovery coming, one the of opportunities the like will recover, of outlook

Rick Wise

thinking is last to Maybe now just just times. X.X about your And us about M&A. debt me, from talk

And strategic you're about help just outstanding portfolio? the Thanks available acquisitions more much, so are available that development where like craziness more we as now? of the think of John. all because in priorities world through are the or team, kind the the maybe feel of with You in talk business of interested your businesses your that

John Groetelaars

active M&A. so Thanks, we Rick. be continue Yes, very to in

able we're were and making working quarter the the craziness the and As of progress. to very with through remain good last focused M&A pandemic, teams on we our continue

tuck-in strategies announcement, operating with. room. international well market opportunities the video happy really OR, solution acquisitions, in we're as strategically in very which Both the another are in business, integration signs one the for one video those around heard support nicely. integration fit vital integration we in connectivity both the into around of They two And closed you small and of one. U.S. As as data case our OR then our this emerging OR

I a It's environment. around rigor held from we So public represent certainly maybe, also think difficult M&A point to likely near-term larger it's and our Barb, not the And our we're allocation that today's if meet very this not question. companies But privately of touch for it opportunities. discipline. remain larger to our part in expectations more of the valuation want looking. think tuck-in near-term. criteria probably companies set active better you strategy is bolt-on I view and was financial really and financial Smaller of a around on capital priorities, But in

Barbara Bodem

think remain you've it allocation John, know, same. I really well, capital the our You priorities covered

But to First M&A growth and lever foremost, we're offset dividend. share to the right list. a support continue the business repurchases and of our looking deal is Absent We'll to the support to as M&A right at of we top will dilution finding the look our our M&A to is continue debt. our We're to us. pay number dividends we're the and share pleased where low absent appropriate. ratio which to for continue X.X repurchases, debt beyond environment really in our decline see going historically this down supportive to right

the to top and going look drive to time. the deals going continue right for over our bottom stay and and we're deals that are to So disciplined growth line


with on Keusch a Larry the question. Please your Raymond James line from is question. state

Larry Keusch

Thanks and everyone. good morning,

July progressed? the bit couple can you're wondering perhaps in if sort through talk here. seeing the fiscal quarter third a how of the little about Just thinking that of and business John, sort I'm or how you trends you're a

John Groetelaars

probably we briefly that breaks was with to talked with COVID; negative. XX% our one Comm start and latter, about it group me in categories, down revenue one by businesses, one Care down of of XX% ways, I'll Yes, that with address CapEx the which two our that of three Larry, negatively let that earlier. was the portfolio impacted

ones and assessment Frontline well we'll office the a elective quicker in close. that of And surgical trend vital our is of were not seeing Care one to physician category uptick can thermometry, thermometry physical is tools, part come second and show come if the in quarter. but in getting primary some a The our Care exited the portfolio, saw our and demand. to vision from in thermometry, they're office everything business as as our the as of Comm, other Frontline signs, growth are outlook in well all the different not the businesses our of patient recovery as Care one I visits handling care physician as to back. all all portfolio. on QX, would hope some return three of And say. I back earlier our healthcare we elements mentioned high in we're to big Those we to pretty not, the -- then nice you PSS safe is for we QX In the is kind care surgeries as imagine of equipment priority and where portfolio, curve,

So to the that in slow month June. was continue recovery And of that the we're that QX did show definitely show of in July. month signs in but that trend seeing

year, or OR patient handling, to that's the OR in the in the of seeing given coming safe infrastructure we're So surgical But installing those its significant we don't as business fiscal increase the the way back that's of of many hospital involve elective and expect a October. as to pre-COVID to And activity coming well product new and do one businesses in in again type reasons quarter. levels, not surgery, on the lines in of schedules then seeing, believe anticipate we the have QX ceilings those our see QX. importance in which backlogs does from resumption times and back surgical starting of we're in we

a feel come area. they back. curve just come confident recovery to that in are to going going slower back, they're So we It's very

very as commentary really both the caregiver The in our well other markets top positioned two on anything we're clinical that's is caregiver bed the In more priorities the a ICU need positioned. bed particular, to and providers and parts comment and patient environment. with the We in if is CapEx, sure of international we're on and as would I'm that ICU uncertainty well the favorable -- capacity, CapEx that is, U.S. I We're everyone's is are in as top communications workflow that favorably in are impacted, where products U.S. CapEx, the of pretty and companies because for not area equipment, signs or critical that customers one, other couple care Comm for in portfolio ICU there And know caregivers actually needs business from industry. is vital the is in and our to priority. equipment heard a our capacity for whether experiencing for bed. Care our of capacity, and more this more ICU the of tailwind

to priority, a high going are even those in constrained So the relative U.S. in have environment capital

full until of benefit be will it and next quarters the government for certainly stimulus support. So hospitals challenging the a couple environment see of

them. maybe stimulus our their over coming And in quarters in volumes and there'll financial That is their financial United the helps shore food, the packages. future billion So the to elective flowed billion environment with about combined $XXX be in more consumption return $XXX acute far, normal has normal up of well-positioned surgery of States. out care combination for events two healthcare in the of the The portfolio that that requirements. pressing significantly urgent near-term, improve around CapEx we those couple most certainty certainty. will of But anticipate and certainly of the good

Larry Keusch

that think about certainly just year-to-date, the thinking that trend was looks as I year-to-date And that from about to feels significantly was thoughts increase COVID-related on there's manufacturing really quarter, but that? it around was which how bit, income so demand, kind margin at start was as And meaningful for two at I GAAP the Barb. up meet it of was in quarter. was in helpful. Ops, the Okay, cash assume like terrific. we mentioned quickly, net a guess it thing like fairly in then ramp-down that'll then some of set more up That record flexed that to you down up, I like least this X% as should one a and looks you back the flow I margins some fourth you And your inventory. looked

about again, Thanks. inventory improvements and So kind going forward cash levels flow in we think from how do of Ops?

Barbara Bodem

well. I thanks for Larry, doing the Hey, question. you're hope

start with gross Let margin. me

that. at was So gross for record really pleased QX XX.X% margin levels and with we're

online presentation we about On at a our And one-time the our at is related that's full-year. that one-time, well sale performance, the highlighted if of QX. XXX that we XX.X%. year-to-date in we're first months year-to-date basis, tracking basis nine in really As really look the we're for COVID you saw to points for

sort our for In the year expansion, of fact, gross all go the against well that. if to way beginning our margin we're you at back tracking of aspirations the

going about COVID second you that One that to one-time to benefit. we the so are there basis the has QX, been Consumables Surgical far benefit As given is that have But receiving we've anniversary XX this of of that's a to business from in lift things think in probably that, consider. two each is keep us won't year, thing August. the you points quarter want mind the about the divestiture

see not will benefit level of in QX. we So the same

our continue pieces. gross It's to aspiration. the long-term expansion in mix want our overall team. be really you to portfolio manufacturing overall, of we on our to are our launches, by going in and to But tracking pleased improvements, and margin, those mind have an it. outstanding to-date keep and that's the variances the Volumes along expectations with full-year. terms in the two of M&A, the driving portfolio This productivity new our ongoing the of immaterial improvements bulk product is really optimization, from down our impact coming on supported efforts operations So

So gross margin. that's about how think we

we driven at As did have things. And a QX. turn cash build different was about flow, we inventory we really, we and inventory, talk by a in and of significant of look couple that

we portfolio XX% our in reaction that that we the of the chain saw of demand. softness a with in our see to for we One was time saw or the sort matchup that it the It fact parts of result And did takes of quarter. supply demand portfolio that of demand.

demands. sure demand how of was market little conscious it build make the have the that as that a we've more bit meet held position build, to we're a part to customer And other deliberately continue we meet to in fluid flexibility a sure to is, the to moves. given The make

will all As think levels, to substantial as more we QX, hope we inventory go think that a QX, answers our as normalize I expect year, but as wouldn't those we into XXXX. change expect start you question. we next head I things about in about your

Larry Keusch

Yes, that terrific. you. was Thanks Appreciate of it. both to

John Groetelaars

risk of clarification don't componentry. that supply our of Yes, kind maybe We excess just of build inventory inventory any chain. see that obsolescence one on to in

Barbara Bodem

This Really deliberate of is good clarification. not choices about risk volume, any about obsolescence.


line Hopkins a is state on Please Bob question. America from your the Bank of question. with

Bob Hopkins

Thank you and good morning.

had -- some So

John Groetelaars

Good morning.

Bob Hopkins

place. the over kind things I are know Good all confusing time; of it's a morning.

question. So I've and longer-term guidance, got on some the -- then a clarifications some just

First, the -- just you're are in fourth the on what clear absolute quarter, terms saying you to about be what saying of the dollar quarter fourth revenues? about

John Groetelaars

I I'll to over then that with Well, start and turn will Barbara. it

We specified, explicitly. Bob, haven't

ventilators Page the -- in delivered the products resilient because transition million around we're a quarter articulate saw, you fourth from driven is able revenue QX what But one-time in requirements. and be second when QX. get in we've half providing which volume of of that result and $XXX can like. see as and is able of best that we overall, you on certainly into delivered the the and the we we're XX% heavily they primarily driven meet those of revenue financially saying nonlinear this that, were look the fact in fourth bed Thankfully, a where then for over we think to product a surge that we stockpiling to looks resilient second you we math decline to quarter will have QX that deliver you'll the as another do outlook projecting that do and in of half slide can XX% believe provided know, Bob, of XX% immediately. what desperate were how of the customers we our But million $XX I that, a the between of and QX. were And impacted, we're presentation, and XX order the overall back are non-invasive beds, benefits

repeat. So don't things those

quarters out to look so would that if you attempt average And the smooth our half this the year like, out. them second ,and take what over the and of second two say, is half look

Bob Hopkins

of think of of -- because of for terms We're you kind everyone lot understand. that with for in gave for million it seems to is right pieces like we're low I on a just just math, understand range that of mean would I just that a clarity that I us the math fourth in now. sort do roughly it gets lot but realized getting maybe purpose when people, $XXX things I the work no, be the moving trying --? to of quarter, all there's I'm some questions Right,

John Groetelaars

for lot to it's outlook puts line. have quite provide revenue us Bob think try the a do on an of enough do, let but we right frankly, I the try underpin there with EPS to chime don't $X.XX, what quite try yes, what we it And to, to are because ability providing we here, on we side, the not is why takes accurate difficult in No, the we're Barb that's and I'll top-line. -- the guidance; on to and

on we give year, is that year However last we we're that's floor and the there's the feel something fiscal full-year feel our exclude to us, levers for the is P&L enough say that the enough $X.XX confident in XX% Surgical year-over-year. would if divestiture certainty Consumables we have growth where EPS you other

to double-digit year highly is So fiscal again, for our ability times our in EPS quite uncertain deliver deliver of. proud we're something

Bob Hopkins

makes information million. looks the you kind And that are in it's of deck. to see just the like quarter it the Yes, were right. what I'm of that we and information if me just understand doing wanted and slide math to trying providing It's about implies fourth total that And $XXX I kind sense. to just very low

John Groetelaars


Barbara Bodem

it bed the net impact impact, it's on the highlighted of we to that and difficult net and was to very orders the of on on quarter, impact pinpoint the all because that subsequent ability look the guidance and QX, Well, And portfolio to challenging. it's suspended deliver just reiterate, the impact in takes. when exact the it's around last the becomes as our has in puts John at QX QX not about net timing just

loads at running could. and be to make providing for as scenarios are as as things preparing looking where we so are And we obviously much of could today, wanted were we sure we clarity

and our look traditionally the Where this particular, EPS takes. the we where was going it floor But is of there? And $X.XX. what But work within we like. standpoint and it the floor is came fluid confident feel a to we again, timing floor. the timing we more on really quarters, back then that can deliver seen. So than it's do providing we've the And the from XX on doing that of and look quarter how thoughts what that will, XX. as And will to revenue net the to it's can falling that sort of timing, to back, the in remember that’s about like the you there's give a also you the if what range, will you and nature the the impact that you're the think of second half math puts the

Bob Hopkins

fair. Okay, and that's

follow-up me that. Let just on

John Groetelaars

whatever I'm let in say, please hey Bob, quarters, to again. object $XXX either would But don't probably we the prior-quarter. the of me going thing your say off number extrapolate results; of the quarter me few And being -- let our to Bob, this the wouldn't or said QX, look, quarterly last million and quarter. these just comment for comment, we way just same right in not results end-up I

you on end extrapolate QX, even So though a of number might it. you can't up for off

Bob Hopkins

I get no, that. No,

me let just for back So -- up just one question. let second a it take additional with me

what quick and that But learnings built see the once the -- $X.XX a we maybe from On the two such it is it's where's like then things. of assumptions terms just little and now, growth through And underlie One about outlook know where I it you get think around if and right thinking right in that you might kind on this, just conservatism. new now some an John, of this, uncertain are view how number? this maybe what time. how quarters? the their Thank on some Just of long-term the that thoughts $X.XX, and kind some -- about into there rough I at just know over of perspective, the based maybe thoughts comment leave bit for earnings guess is as you're your you what you. that. a based of all thinking be on you on business, revenue course what could business couple longer-term, the I'll all last conservatism

John Groetelaars

takes. I'll first Barb puts the over and $X.XX thanks the that the question Yes, of turn and part Bob. to on

Barbara Bodem

take to Happy it.

So for I expectations think we the QX. margin ago talked and a while about gross little

in I stated the leverage, kind And have operating year. for our not with think line leverage goals expense QX. that into significantly then -- margin expecting expectations lean the we be gross trend But very beginning QX. gross at we expansion. to of we out So around expansion where our repeat saw of of operating been to overall With margin not XX.X% you good should beginning a the towards in continue our that regards expense of

As we impact working. as year-over-year saw decline the all we because remote expenses on to the of business move

John operating and marketplace, because just think activity as One are so to that we're will of as and has different pick-up QX, customers. the about you well, our in there a expected reconnecting as is up QX. couple think is you in picked as about spend things about, little we're has be out talked a with expenses, level Now, bit

impact able to go So a activity investments that be you deliver And question to plus and the and But find QX, commitment good it's in uncertainty the the QX to remain of giving in relative of we specific on where those. turned a so for operating will takes normal we're continue on come as we're why we as pieces portfolio path is not there strong. believe going and on puts QX. moving into the the the are growth $X.XX many to and highlighted and the to those to margin overall on expansion really both year. our down different because The QX, of net to around earlier. we the That's we guidance, timing that level

John Groetelaars

really acceleration connected connected in tool more our bed and environment advancing ICU offering. excuse the actual So the Hill-Rom first, it driving-off of key by group. remarkable both -- then expansion and especially assessment navigate performance And double-digit Communications, second to than care that monitoring, pandemic projecting opportunities, yesterday. an investments monitoring Care today full-year the results our our question, patient of then And right. for care in diversity for will of to some some and of ability with now nice the and our It'll part and deliver our emerging still the of health, through the go driven be The the be say is market home of in what and as our let connected see full-year and respiratory the It's application patient this going patient example. care Telehealth areas: and direction relevant the growth portfolio, ever quarter. has resiliency that that, and and point illustrate hospital driven-off year-to-date growth category product continue Long-term, me four revenue the select smart I'll vectors and a remote Hill-Rom financial the compared And current and the results ICU physical growth then products me looks answer in including know our and we in at we're and EPS not and been. of it the portfolio, to new level, markets, vision is we'll our towards become next that the pretty peer monitoring uncertainty quarter like. and what which to flexible for

well-positioned in LRP our results So three-year vehicles in I the that plan very today, over aspiration mid-single-digit are current from think portfolio aspiration EPS long-term long do in of period resilience and that and that we're and to grower our consistent provide earlier that. holds growth the to outlined and year growth or growth think be double-digit our this showing we still we our vectors we're time


your Lewis a Please Morgan is with David Stanley on question. question. with state line the

David Lewis

good Hi, morning.

couple Just question, to. I'm I I here. follow-ups go but Bob's going a just, of hate to back to

there in earnings implied range your of to the look sort guidance, of for $X.XX kind of the guys if for $X.XX deck So by assessment margins-ish -- guidance quarter, that your you fourth applies number. kind says range sort deck. it out various and it the doesn't fourth of of quarter your at is on And it XX%

much slides? as confidence earnings. the sort sort confidence $X.XX to range have saying saying have more a the don't we of in of Or you are in you're those by lot the implied isn't revenue, $X.XX So we

want still the I before I'm make very exit are expectations we just confused to call? here sure closely and set So

John Groetelaars

the not code. And we you're think guidance, Yes, but right that into like as and to seeing we're could. explicitly But provided we -- I backing to did I explicitly right David in can you're we're provide much I we code. not as color going that zip numbers it, best giving our you're the said, zip Yes, certainly in because affirm fill-up.

to we And can try try year kind we to just don't opposite. fact, much to evade that so as possible do the range of as half second current that get so you you've outlined. in results you We question the provide on as results, and color Bob, the to mean

a with everything levers to the have more for and you lot hard number the on If moving EPS. a in ability down confidence floor provide P&L our

David Lewis

you. range work Okay, that a to gives us with. Thank

Is fear sort average, tailwinds a of asked to as -- related lot the there of John, and that's decent back of dynamic, a to I a half of X%? this of in that, that XQ you've kind about believe these around this or so in sort trough And as half given headwinds year X%. paints and or the that but thinking cross next the Barb quarter peak investors and fourth number the and floor trough very year for of not I core the been think sort think for reasons way third the an that business just about of to or proxy business good a question sort first that the picture either of of gross decent thinking any

John Groetelaars


Barbara Bodem

that to me or --? want You John take

John Groetelaars

ahead start, sure, I and go Barb want you start. to

Barbara Bodem

extrapolate extrapolate average of and as difficult, purely So present Even talk we earlier, David we it, would could we that it's those QX. I John not as QX. of commented challenges. about some off And wouldn't taking off of two, think the

that some we're to we based have in sales homes the the safe the versus patient lumpiness bed QX. the really had market seeing it result as handling capital a diagnostics as of the different speeds You phenomenal in portfolio. and surgical. of about And think care then physical that volumes the and going we're in U.S. to talked Much underlying the on on earlier, we're have shape around the versus the speed the and recovery near-term, whether you're impact really John about seeing of in

is lines that. wouldn't are moving moving that speeds. a And I doing a second lot troublesome therefore of sort of there's at So extrapolation, even think half I different a just advise taking

be. rolls on the we next talk us bear And we're a more clear we longer be have to able And will together, time where XXXX the I to think with little pandemic to that that you're going about more have information; we'll out. as have then. trajectories will

David Lewis

two, me, questions for just two apologize. more I And Okay. quick

growth You floor XXXX XX% mentioned Barb any range XX% of encouraging, the sense double-digit a fiscal of the business? or with of business of other sort exit is the can for which

Barbara Bodem

talked second we half So XX% the in the in we've of you see and the about we've where XX% range. given growing year, the that

also the think in subcategories XX%, as continue continue grow QX. that I we about around to monetary think -- see talked areas double-digit that Those on monitoring. we've around about growth to patient we

David Lewis

flat. Is that year XX% exit of can But Okay. that business aggressive? this of XX%, that too kind a the view

Barbara Bodem

what we going look similar in last that that very how year. growth about saw year-over-year spoke we to QX to think We collectively of is

John Groetelaars

the math showing over that wildcard environment time. in the kind to decline generally a of going Really, It's and business, a just there, to this talked was obviously of QX, last period right. nature wildcard Dave, year that be before we're quarter-to-quarter the it in in It's the is going David, is that the is unfortunate the nonlinear. kind nonlinear. Maybe is it's in. we And the as multi-quarter just such that's show there, to here. negatives, of in be QX, positive relative surge and the we're that providing bed that pandemic positive But some quarter-to-quarter going of to some piece,

David Lewis

of kind core you It's just that X.X% some here I for just range on Yes, in maybe And the of mean closer recently the lastly quarter confidence correct. first is fourth totally in to you've the LRP specifically, LRP, the XXXX. X% expressed understand. half XXXX And John, growth in LRP. more the guidance assume did if

X% the in and for XXXX, years, the we you growth kind can LRP, of likely deliver of now you X% about in the or just next in looking half now comes half X% two like it's feeling XXXX do lower? that of you so XXXX it's the of half your more the in LRP growth X% if that do to So do back think can you to get first the the back have LRP, are if LRP

John Groetelaars

we feel of of said, and growth give and deal would our multi-year the can achieved long-term now, of namely over those this next year over right in will to likely business rebound that variability aspirations fiscal have quarter-to-quarter right, I long-term to the just growth in business business comment Yes, for of that are very We a vehicles so because the been QX us that this interesting the the in That financials bed of confident period. going in the as volatility shining way. and XXXX. parts end One fiscal in QX we're period time beginning our it's elements environment the with be longer some a impacted. some and quarter-to-quarter trajectories, through comps in year, said,

David Lewis

very Okay, much. Thanks so helpful.

Mary Kay Ladone

questions. We more longer time a I more two we'll just have know questions, go bit today. little please. you. two for But Thank


question. with Taylor from question UBS. a Matt have Please your state we And

Matt Taylor

Hi, for the taking thank you question.

XX% one about portfolio seems So the wanted I the to the guidance of that pressure. just ask for COVID

guidance because up comments, So in having to understanding comps the and script trouble picking office I'm relative improving. care the visits your talked the activity about you physician

QX, still why see in So wouldn't why in be it the XX% down QX? as half, any improvement you the would second same

John Groetelaars

a Yes, robust business same really question. don't That's good. is That's tough the current kind In do a QX. the improvement good And see phasing prior-year. expect from in. we're XX%. we around in our business normally answer why environment, situation simple We comps have the of of the quarterly our of sequential because we in or seasonality that the

the total sequential expect then business surgical We that comment handling XX% improvement the -- And other which of XX% patient that on QX of revenue. and about safe part with is between the is whole. around the QX and

recovery, is little getting So of XX% on because to going really to access slower a that infrastructure. bit install of XX% be

Matt Taylor

on follow-up one opportunity. And okay. Okay, the ICU longer-term

a greater or commented than ICU Philips balanced they think be a there could as doubling you for that example has could U.S. less that is number be well? that? Do time. So Is capacity think over it of

John Groetelaars

number honing believe that the a incremental opportunity the and well available. over will we're do million be that speak of And Yes, in doing lot terms it's years. we a four that We research. next TAM over as $XXX of

an we're seeing. on number kind that basis, that's preliminary So incremental that's of a


your the is Please KeyBanc line with on with question. Mishan question. a Matthew state

Matthew Mishan

in. for me squeezing you Thank

that Just those TAM, think is on And countries talking included Tampa about. a including TAM developed well? opportunity about are with and million big do you in like emerging incremental the China, differences? bed the markets also $XXX India ICU difference for There's that European talking in and are versus you you're how that as about

John Groetelaars

in quantify exactly it of very an we're of Yes, can as be a end practices. some doing using those and the to kind different because lower bed that's happy they'll bed have thing ICU markets, emerging med-surg

does that that over finalize, work, thinking the to number you the in we or dynamics. $XXX gave years four is incorporate the million So better terms over market but roughly of that I next need

Matthew Mishan

you is penetration did the it still, of And all the where existing still just in are quarter fairly or context, base? the at Centrella seriously to put it's it And low? on last accelerate that over

John Groetelaars

will percent give XX% a XX% of it easily around the last two, quarter in it's probably but the low; an it's mark of States. uptick our fairly still still or of XX%, It’s business United Hill-Rom below base below

of then connectivity way product a we future. smartphone story into go and terms offerings that of digital and long smart building the to So as to have our we penetrating base in go around that bed

John Groetelaars

thank thank to your I'll And back for with I Well, you. on over want back Mary call. questions given for the thank bit, little turn went over the to it it over say And the to will to call. you that today. Okay, everyone Kay Mary really a We turn but you and hung climate, hopefully Kay.

Mary Kay Ladone

John. Thanks,

but and little Thanks Just sorry, follow-up day. we say so weekend. everyone wanted for thanks a any have answer the a to great questions much today, to ran happy during late


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