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Date

Thursday, July 31, 2025 at 8:30 p.m. ET

Call participants

Chief Executive Officer — Mick Farrell

Chief Financial Officer — Brett Sandercock

Chief Legal Officer and Secretary — Sally Schwartz

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Takeaways

Revenue: $1.35 billion non-GAAP revenue for the fiscal fourth quarter ended June 30, 2025, representing 10% headline and 9% constant currency growth, with a $15 million positive impact from foreign currencies.

Gross margin: 61.4% non-GAAP gross margin, up 230 basis points year over year and 150 basis points sequentially, driven by procurement, manufacturing, logistics efficiencies, and favorable currency effects.

Segment growth (US, Canada, Latin America): 9% sales growth; device sales increased by 7%, masks and other sales increased by 12%, including incremental Vertuox revenue for two months.

Segment growth (Europe, Asia, other): Sales up 9% in constant currency; device sales increased 10% on a constant currency basis, masks and other sales increased by 7% on a constant currency basis.

Residential care software revenue: Increased by 9% in constant currency, led by Medifox DAN and HME verticals.

Future gross margin guidance: Projected at 61%-63% for fiscal 2026, subject to currency movements.

SG&A expenses: Increased 9% headline and 8% constant currency; improved to 19.7% of revenue from 19.8%; further guidance of 19%-20% in fiscal 2026.

R&D expenses: Increased by 7% headline and constant currency; now 6.4% of revenue versus 6.6% for the quarter; fiscal 2026 guidance of 6%-7% of revenue.

Operating profit: Increased by 19% with operating margin improving to 35% from 33%.

Net income and EPS: Net income rose 22%; non-GAAP diluted EPS increased 23%, with a $0.05 per share benefit from foreign exchange rates.

Free cash flow: $1.7 billion for fiscal 2025, providing flexibility for investments and shareholder returns.

Capital return: Over $610 million returned in fiscal 2025 via dividends and share repurchases; quarterly dividend raised to $0.60 per share, up 13%.

Share repurchase plan: Increased to approximately $150 million per quarter in fiscal 2026, with an estimated buyback of about 1.5% of outstanding shares for the year.

Balance sheet: Quarter-end cash balance of $1.2 billion; $668 million gross debt; $541 million net cash; $1.5 billion available under revolver facility as of June 30, 2025.

Vertuox acquisition: Completed for $140 million with annual revenue run rate of approximately $45 million; neutral to non-GAAP EPS.

Tax rate: Non-GAAP effective tax rate of 21.9% for the quarter versus 18.7% prior; full year effective tax rate was 19.9% versus 20% prior; fiscal 2026 guidance at 21%-23%.

Summary

ResMed(RMD -4.12%) emphasized operational efficiency, digital innovation, and capital deployment as drivers for continued growth. Management announced the integration of residential care software leadership into broader business functions, advancing the 2030 operating model. The company is expanding its digital strategy with AI and GenAI features in product and process innovation, including MyAir's 24/7 support and virtual mask fitting studies. Brand investments and demand generation efforts resulted in increased engagement from primary care physicians in continuing medical education. Guidance included specific non-GAAP targets for SG&A and R&D expenses as a percentage of revenue for fiscal 2026, with ongoing gross margin improvement initiatives identified as key drivers.

CEO Farrell stated, "We are significantly increasing our targeted share repurchase activity for fiscal year 2026," clarifying the capital return focus.

Sandercock said, "Changes in average selling prices had a minimal impact on our gross margin," emphasizing that expansion was operationally led.

About half of the sequential improvement in gross margin was due to favorable foreign currency, with the remainder attributed to internal cost efficiencies.

The board authorized both a higher dividend and a step-up in share repurchases, framed as indicators of business strength.

Chief Financial Officer Sandercock stated, "Vertuox has an annual revenue run rate of approximately $45 million," providing concrete scope of the deal's impact.

The integration of Vertuox, Ectosense, and Sonderware is described as a portfolio move to expand the home sleep apnea testing funnel and streamline diagnosis-to-treatment pathways.

Industry glossary

SG&A: Selling, general, and administrative expenses; non-production costs involved in running the company.

RCS: Residential care software business segment; cloud-based platforms supporting out-of-hospital care providers.

HME: Home medical equipment providers; companies distributing and supporting sleep and respiratory care therapies outside hospitals.

PAP: Positive airway pressure therapy, including CPAP (continuous), APAP (auto), and bilevel variants, used for treating sleep apnea.

Brightree: ResMed's business management software and service solution for home medical equipment and out-of-hospital providers.

Medifox DAN: Software vertical focused on documentation and workflow solutions for home care and out-of-hospital care.

GLP-1 medications: Glucagon-like peptide-1 receptor agonists, a drug class associated with weight loss and other comorbidities, referenced as contributing to sleep apnea awareness and therapy initiation.

Vertuox: Newly acquired provider of scalable home sleep apnea testing solutions.

Full Conference Call Transcript

Mick Farrell: Thank you, Sally, and good morning from a wintry, cold, and rainy Sydney, Australia. Good afternoon to those in the US, and good evening to those in Europe and beyond. And welcome to ResMed's fourth quarter fiscal 2025 earnings call. I'm pleased to report that ResMed delivered another very strong quarter, closing out fiscal year 2025 with excellent results. In our fourth quarter, we achieved 10% year-over-year reported revenue growth and 230 basis points of year-over-year gross margin expansion. We continued our disciplined approach to investments in both research and development as well as SG&A, and we delivered another quarter of very strong free cash flow.

In addition to being the world's leading sleep health and medical devices company, ResMed continues to build a global digital health ecosystem encompassing sleep health, breathing health, and health care delivery in the home. We continue to see robust demand for our products and are now serving more than 154 million lives through our hardware, software platforms, and technology solutions. We are well on our way to achieving our ResMed 2030 goal of improving over 500 million people's lives by 2030. I want to take this opportunity to thank the more than 10,000 ResMedians serving patients and customers in more than 140 countries worldwide for all that they do to serve our customers today and every day.

Last quarter, I spoke to three key things. First, ResMed generates robust free cash flow and has a very strong balance sheet. Second, we're committed to operational excellence as well as driving ongoing operating leverage. And third, that ResMed is a compelling investment opportunity. We have a strong, sturdy ship that can go through the waves, and especially amidst the global macro uncertainty that we're seeing around tariffs and trade and so on, ResMed has a very smooth path. These themes remain highly relevant here as we discuss our fourth quarter, and our fourth quarter results illustrate them well. So let me walk through the first of those themes.

First, our fiscal year 2025 free cash flow is $1.7 billion, which provides ResMed with significant flexibility to both invest in our business and return capital to our shareholders. On the inorganic growth strategy front, we are focused on finding tuck-in size acquisitions that will help us accelerate towards our ResMed 2030 strategy. Recent examples include Sonderware, which is software for sleep physicians and pulmonary physicians, Ectosense, which has their product, the Nite Owl, which is basically a wearable fingertip size home sleep apnea test, and just last quarter, we completed the acquisition of Vertuox. These businesses will help patients move through the sleep care funnel more efficiently.

Vertuox reduces diagnostic delays, accelerates the rate of people moving from symptom recognition to home sleep apnea testing, and keeps more patients on the path to treatment. Vertuox will continue to operate independently under its own brand, and there are no changes that we plan to how providers and physicians will interact with either Vertuox or ResMed. In the US health care system, physician prescriptions, payer requirements, and the need for personalized setup and support make home medical equipment or HME providers our essential partners in ensuring patients receive and stay on effective therapy.

And sleep labs and home sleep apnea testing run from sleep labs is also a huge part of the infrastructure that we work with all day and every day. You will see us continue to selectively invest in our what we call digital sleep health concierge capabilities, including screening protocols, clinical tools, seamless workflows, and cloud-connected care pathways. We will be looking to expand the diagnostic funnel to keep up with new patient flow coming from three sources. One, and most importantly, our own ResMed-driven demand generation effort that I'll talk about later.

Two, the greater awareness of sleep apnea that has been generated by the promotion of GLP-1 medications, particularly to the specific primary care physician groups that they target and we can target as well with education. And three, the accelerating momentum in consumer wearables that are capable of sleep health monitoring as well as some with specific sleep apnea detection capabilities. ResMed remains laser-focused on helping the more than 2.3 billion people worldwide that suffer from sleep apnea, insomnia, or respiratory insufficiency due to COPD or neuromuscular disease, and all those that need care delivered in the home.

We've also returned significant capital to shareholders in fiscal year 2025 through a combination of dividends and share repurchases that have totaled more than $610 million for the year. I'm pleased to announce that ResMed's board of directors, my fellow board of directors, has authorized an increase in the quarterly dividend for fiscal year 2026. Additionally, we are significantly increasing our targeted share repurchase activity for fiscal year 2026. Brett will discuss both these actions in more detail in his remarks in a few minutes, and they represent the strength of our business.

ResMed's very strong free cash flow affords us the ability to invest in the business through R&D and SG&A expenses, but also to pursue our share buybacks and raise our dividend as I just mentioned. But in addition to that, to also have significant funds available for strategic technology, and, I would call, pathway seamless pathway type tuck-in acquisitions. My second key message relates to our commitment to operational ResMed has demonstrated a very strong track record of improving and driving gross margin expansion, and a pipeline of opportunities to deliver further operating leverage across our business.

In the fourth quarter, we achieved 230 basis points of gross margin expansion year over year and well over 100 basis points sequentially quarter over quarter. And we have more runway left. We'll continue the execution on these opportunities over the course of our fiscal year 2026 that we're just firing up on here, and I'll update you here on this call every quarter as we continue to deliver these results. We'll also continue to evolve our global manufacturing footprint. We're approaching the official opening of our newest manufacturing location in Calabasas, California.

This site will double the size of our current manufacturing footprint in the United States and is designed for us to scale up our US-made product volume over the coming years and leverage the amazing technology capabilities of folks in East LA in terms of aeronautical and automotive industries that we use in the field of motor technology and motor manufacturing. During the fourth quarter, we delivered very strong net operating profit growth even with the continued investment in both R&D and SG&A. We see these growing investments in innovative R&D as well as SG&A investments that are focused on demand generation, demand capture, and demand curation as critical components to ResMed's long-term growth. ResMed is an innovation machine.

With R&D focused on market-leading masks, cloud-connected devices, and digital sleep health platforms, along with growing investments in AI, GenAI technology, that's across the business. We make the smallest, the quietest, the most comfortable, the most connected, and the most intelligent therapy solutions for sleep apnea and now insomnia and respiratory insufficiency. As well as having the market-leading software for health care and broader care delivered right where people live. We continue to roll out our amazing AirSense 11 to more and more countries in our global markets.

Over the course of fiscal year 2026, you'll see us do the same for our latest patient interface technologies, including the AirTouch, N30i, which has an amazing fabric-enhanced capability that can be put onto LSR manufacturing, you know, very unique way by our manufacturing and technology teams. And, also, the AirFit F40, which is a minimally contact oral nasal mask among many of other products in our mask portfolio. We also have a robust roadmap for incorporating AI and GenAI technology into our digital products. In June, we integrated our digital assistant that we call Dawn, as in the sun rises, into MyAir, our Australia business to provide personalized 24/7 support to our local users.

We plan to have a wider rollout of Dawn on the MyAir platform, which is our app that sits on smartphones throughout fiscal year 2026 as we get regulatory approvals and move that technology to the various countries that we operate worldwide. Watch this space on that front. Additionally, within the MyAir app, our smart coaching feature uses machine learning combined with behavioral science-based interventions to enhance personalized PAP therapy outcomes. And finally, our resupply attrition predictor helps Brightree customers in the US to better manage patients who are at risk of dropping off or quitting positive airway pressure therapy.

This technology enables our HME partners to create personal touchpoints with patients and to ultimately increase long-term adherence of those patients. Greater long-term adherence leads to better patient outcomes, happier physicians, lower total cost of care for payers, and better resupply volumes that are beneficial for HME providers and, obviously, for ResMed. As our trained AI technologies improve with more and more data, we foresee ResMed solutions will transform into proactive personalized health care companions. ResMed is extremely well-positioned to turn our over 23 billion nights of respiratory medical data as well as our three-plus decades of sleep science and sleep medicine knowledge into personalized treatments and personalized insights that integrate seamlessly with wearable data, health data, and virtual care.

In addition to our products, we see multiple applications for AI and GenAI in our business processes. In our R&D team, the use of agents in verification and validation can reduce development time to a fraction of our prior processes. We're using AI to write test scripts to diagnose test failures, to write reports, as well as in verification of our product labeling. We are also re-architecting development processes. As one example, we've been able to use AI to develop a human head-shaped variance model to represent a broad range of ethnic groups to run virtual fitting studies.

This will allow us to replace what was previously our multiple in-person mask fitting studies would likely be limited in sample size to maybe 100 people and replace it with a digitized model that can simulate many thousands of people using less time, less planning, and less investment dollars. This type of doing more with fewer resources approach is only accelerating as we expand and broaden our use of AI across the business. Our SG&A investments have also continued to show a very strong ROI. Earlier this year, we announced a comprehensive ResMed brand evolution strategy and several targeted direct-to-consumer marketing campaigns to build brand awareness and really importantly, to drive undiagnosed patients to seek care.

Results to date have been very promising as we are in the early phases of this. But if this is a marathon, our first mile here in Australia, our first kilometer, was a great lap time. We launched a multi-market campaign targeting sleep health awareness primarily in countries where we have significant direct market channels, including Germany, Australia, New Zealand, Korea, and India. To date, we have seen growing sell-through and delivered a strong return on our advertising spend or ROAS as the Martech people call it, that is many multiples of the investment we've made. We've also had an omnichannel US-based campaign that's been focused on the perception of CPAP therapy.

This effort ran in metropolitan areas in the US, very specific ones, for several months earlier this year and touched both consumers as well as health care providers. So I think physicians, HMEs, primary care physicians, beyond. On the physician education front specifically, we've expanded our offering of continuing medical education or as they're called CME programs to teach physicians for the benefits of CPAP, APAP, and bilevel therapy as the gold standard, the frontline treatment for any patient that has been diagnosed positively with sleep apnea. In accordance with sleep medicine guidelines from the AASM and beyond.

We're seeing an increased participation from primary care physicians, We had 20,000 unique primary care physician participants who have taken our courses, those CME courses. And over 32,000 courses taken. So people are taking these multiple times. We love to see the repeat CME users. That means the PCPs, the primary care physicians, the GPs, they want to get even deeper into the field of sleep health.

One of the most encouraging statistics I saw from this work is that 75% of the CME course graduates indicate in the survey that we do post the training that they specifically intend to change the clinical practices that they have in their practice related to sleep health based on what they've learned from our CME programs. This is an incredible result, and we will watch this space for the level of increased prescriptions and increased flow of patients into our home sleep apnea testing, sleep lab funnel, and ultimately, to prescriptions.

For those who've been watching our brand-enhanced investments closely, you will know that ResMed was recently named the official partner of the Qatar Airways British and Irish Lions tour to Australia and beyond. It started actually in Dublin, Ireland, and went around the world where we all have businesses in all these countries, and many of them omnichannel businesses. ResMed launched what we call the tackle your sleep campaign. This is a comprehensive digital and content-focused campaign featuring some of the world's best athletes in the field of rugby and coaches in the field of rugby.

This campaign aims to raise awareness about the importance of quality sleep as the third pillar of health, along with cardiovascular exercise, and good diet and nutrition. We will track brand awareness, net promoter scores, as well as consumer and patient flow statistics to measure the ROI. And the return on advertising spend or ROAS. Our clear goal of these brand awareness and demand generation campaigns is to help the 2.3 billion people worldwide who need our solutions to know the ResMed brand, and more specifically, to know where, how, and when to find a path to screening, diagnosis, and ultimately, to being on therapy for life, to save their job, to save their marriage, to save their life.

Watch this space as we measure the ROI that we've had with these would say, relatively modest global marketing efforts. And we will pursue ongoing targeted additional phases of these initiatives in fiscal year 2026 with every investment based upon strong ROI and proven ROI targets coupled with disciplined spend of our valuable SG&A resources. We are accelerating the next step of our ResMed 2030 operating model by integrating our revenue and product functions of our residential care software or RCS, sometimes called our SaaS or software as a service business, into the broader ResMed organization. This builds on earlier efforts that integrated our RCS finance, human resources, cybersecurity, and marketing functions, and many more. Over the last periods.

By aligning our people, our workflows, our platforms, and our data across the business, we can continue to reduce friction, improve therapy adherence, and deliver more personalized and more digital care. In line with this ResMed 2030 operating model evolution, I would like to announce that Bobby Gachal, who is the current chief commercial officer for our RCS business, that Bobby will be leaving ResMed today actually, here. It's we're in the August 1 here in Sydney tomorrow for the US. And he's leaving ResMed to become president and chief operating officer of a software business that is not competitive to ResMed, and it's in the field of software for urgent care.

I would like to take this opportunity to thank Bobby for his amazing thirteen plus years of dedication and service to ResMed. I personally hired Bobby from a company called ON Semiconductor to join the ResMed Americas commercial team that I was running at the time in 2012. Bobby played a key role in our digital evolution and was one of the first ResMedians to jump into our new RCS business straight after our Brightree acquisition in 2016. We put him as a chief operating officer there, almost out the gate. And in the years since then, Bobby has helped scale our residential care software business across home medical equipment as well as home health, home nursing, and beyond.

He's helped us integrate strategic acquisitions as well as driving innovation. So we thank Bobby for his many contributions this decade plus, and I personally wish Bobby the best of luck in the next phase of his career journey and his life journey. In terms of next steps of here ResMed of our residential care software business leadership, our strong and capable residential care software leaders, Hoegham, Arne on Medifox, Tim on the MatrixCare brand, Greg across Brightree, they will now all report directly to Mike Fliss, our global chief revenue officer. This is a fulfillment of our 2030 operating model that will accelerate our journey to meet and beat our ResMed 2030 strategy goals.

So one key message before I hand over to Brett Fey's remarks is this. Quarter after quarter, ResMed has demonstrated it is able to consistently deliver both financially and operationally. We're a compelling investment opportunity amidst what I would call global macro uncertainty. We are delivering products and solutions that customers love. And I use customers meaning patients, physicians, providers, payers, and they vote with their wallets. They buy our stuff more than our competitors. And we've been closely monitoring the global trade environment and the evolving regulatory landscape in both Washington, Brussels, and Beijing.

And as I noted last quarter, because our products are used to treat patients with chronic respiratory disabilities, they've been subject to global tariff relief for decades, and that has been ongoing and continuing. This affords ResMed the opportunity to remain fully focused on our business helping the more than 2.3 billion people worldwide that need our help for their sleep apnea, insomnia, and their respiratory insufficiency, as well as all those needing our market-leading software for health care delivered in the home.

Operator: And then home to home.

Mick Farrell: Let me make some brief comments about the competitive bidding program that CMS recently stated that it plans to resume. I simply cannot get too specific as it has not yet announced any of the details as to what product categories are included, nor the time frame that they plan for the next round. But during this comment period, I'll remind you of this. ResMed has a long-standing record of engaging constructively with the US government policymakers and industry participants over more than a decade in this area.

I'm the incoming chairman of Advamed, which is our US-based but also global advocacy group, and I plan to work with Advamed and work with all of our sort of industry groups to help give the right comments to the US government as we go through this process. Again, as always, ResMed remains committed to advocating for policies that protect most importantly, patient access to care and policies that promote fair and sustainable reimbursement for our HME providers. Continue to support our HME customers and the millions of Medicare beneficiaries who rely on ResMed for access to market-leading high-quality sleep and respiratory care at home. So I'll close with this.

ResMed is highly resilient as a company and as a culture. Successfully navigated the COVID crisis, and immediately one of our competitors, Abrupton, multiyear exit from the device market in the US, and then the global supply chain crisis, including specifically the semiconductor supply issues that we got through well. We have built the world's largest respiratory medical device manufacturing facility and we have an incredibly robust global supply chain. We have driven sustained, strong, top-line growth, and we're highly focused on operational execution as you saw in our gross margin expansion that we delivered this quarter and throughout fiscal year 2025, and we're not done.

We have maintained our very strong balance sheet, and that gives us ballast in the boat and flexibility for the future. We've established a leading market position in over 140 countries worldwide in a very underpenetrated market that still has a long runway of growth ahead. All these factors give us confidence in our ability to deliver for all of our customers, for consumers, for patients, for physicians, for providers, for payers, and for our communities. And, of course, for you, our shareholders. So as we launch here into fiscal year 2026, we continue to execute on our 2030 strategy, investing in innovation, scaling our impact, and we're laser-focused on delivering another year of strong results.

So with that, I'll hand the call for the first time just right next to me in the room over to Brett for a deeper dive into our financials, and then we'll open the floor to your questions. Brett, over to you.

Brett Sandercock: Great. Thanks, Mick. My remarks today will provide an overview of our results for the 2025, unless noted all comparisons are to the prior year quarter and in constant currency terms where applicable. Had strong financial performance in Q4. Group revenue for the June was $1.35 billion, a 10% headline increase and 9% in constant currency terms. Revenue growth reflected positive contributions across our product and resupply portfolio. Year-over-year movements in foreign currencies positively impacted revenue by approximately $15 million during the June. Looking at our geographic revenue distribution and excluding revenue from our residential care software business, sales in the US, Canada, and Latin America increased by 9%.

Sales in Europe, Asia, and other regions also increased by 9% on a currency basis. Globally on a constant currency basis, device sales increased by 8% while masks and other sales increased by 11%. Breaking it down by regional areas, device sales in the US, Canada, and Latin America increased by 7%. Mask and other sales increased by 12% reflecting continued growth in resupply and new patient setups as well as incremental revenue from two months of owning Vertuox. In Europe, Asia, and other regions, device sales increased by 10% on a constant currency basis. And masks and other sales increased by 7% on a constant currency basis.

Residential care software revenue increased by 9% on a constant currency basis in the June underpinned by robust performance from our Medifox DAN and HME verticals. We will continue to report residential care software as a separate segment in our financial results. During the rest of my prepared remarks today, I will be referring to non-GAAP numbers. We have provided a full reconciliation of the non-GAAP to GAAP numbers in our fourth quarter earnings press release. Gross margin of 61.4% in the June increased by 230 basis points year over year and by 150 basis points sequentially. These increases were primarily driven by procurement, manufacturing, and logistics efficiencies as well as favorable foreign currency movements.

Indeed, currency movements accounted for almost half the sequential improvement in gross margin. Changes in average selling prices had a minimal impact on our gross margin both on a year-over-year and on a sequential basis. We've made considerable progress on our gross margin expansion objectives and continue to work diligently on our gross margin initiatives pipeline. We remain focused on making sustained long-term gross margin improvements. Looking forward and subject to currency movements, we expect gross margin will be in the range of 61% to 63% in fiscal year 2026. Moving on to operating expenses, SG&A expenses for the fourth quarter increased by 9% on a headline basis and by 8% on a constant currency basis.

The increase was primarily due to increases in employee-related expenses and increases in marketing expenses including investments associated with our recent global brand launch along with targeted demand generation activities. SG&A expenses as a percentage of revenue improved to 19.7% compared to 19.8% in the prior year period. Looking forward and subject to currency movements, we expect SG&A expenses as a percentage of revenue to be in the range of 19% to 20% in fiscal year 2026. R&D expenses for the quarter increased by 7% both on a headline and constant currency basis. The increase was predominantly attributable to increases in employee-related expenses. R&D expenses as a percentage of revenue were 6.4% compared to 6.6% in the prior year period.

Looking forward and subject to currency movements, we expect R&D expenses as a percentage of revenue will be in the range of 6% to 7% in fiscal year 2026. Operating profit for the quarter increased by 19% underpinned by revenue growth and gross margin expansion. Operating margin improved to 35% of revenue compared to 33% in the prior year period. Our net interest income for the quarter was $6 million. Our effective tax rate for the June was 21.9% compared to 18.7% in the prior year quarter. The increase in our effective tax rate was due to a low comparable prior period tax rate and current year changes in our global mix of earnings.

Our effective tax rate for the full year was 19.9% compared to 20% for the prior fiscal year. We estimate our effective tax rate for fiscal year 2026 will be in the range of 21% to 23%, the uptick primarily due to the impact of tax legislation taking effect for certain jurisdictions beginning in fiscal year 2026. Our GAAP effective tax rate for the June was 17.1% as we recorded a one-time tax benefit of $21 million relating to the cessation of certain business activities. We have treated this tax benefit as a non-GAAP item in our fourth quarter financial results. Our net income for the June increased by 22% and non-GAAP diluted earnings per share increased by 23%.

Movements in foreign exchange rates had a positive impact on earnings per share of approximately $0.05 in Q4 FY 2025. Cash flow from operations for the quarter was $539 million reflecting strong operating results and disciplined working capital management. Capital expenditure for the quarter was $31 million. Depreciation and amortization for the quarter totaled $64 million. We ended the fourth quarter with a cash balance of $1.2 billion. At June 30, we had $668 million in gross debt and $541 million in net cash. We also have approximately $1.5 billion available for drawdown under our revolver facility. We continue to maintain a solid liquidity position, strong balance sheet, and generate robust operating cash flows.

We are well-positioned to weather the ongoing global uncertainty and geopolitical challenges. As Mick mentioned, we completed the acquisition of Vertuox during the quarter for consideration of $140 million. Vertuox has an annual revenue run rate of approximately $45 million. We have included Vertuox in our financial results from May 1. Overall, the results are not material to the group and were neutral to non-GAAP earnings per share for the June quarter. Today, our Board of Directors declared a quarterly dividend of $0.60 per share, representing an increase of 13% over our previous quarterly dividend and reflecting the Board's confidence in our operating performance.

During the quarter, we purchased approximately 419,000 shares under our previously authorized share buyback program for consideration of $100 million. We plan to further increase our ongoing share buyback program and purchase shares to the value of approximately $150 million per quarter commencing in 2026. At the current share price, this would result in approximately 1.5% of our outstanding shares being repurchased during fiscal year 2026. Going forward, we will continue to invest in growth through R&D, deploy further capital for tuck-in acquisitions, and continue our share buyback program. With that, I'll hand the call back to Sally. Thank you, Brett. We'll now begin the question and answer session.

Sally Schwartz: I'll hand the call over to our operator, Kevin, to provide instructions for that session.

Operator: Thank you. We can accommodate everyone on the call. You have other questions, you can be put back into the queue. Once again, that star one will be placed in the question queue. And please limit yourselves to one question. Our first question today is coming from Craig Wong-Pan from RBC. Your line is now live. Thanks.

Craig Wong-Pan: Just wanted to understand the rest of world devices growth, you know, kind of really good growth there. Just wanted to understand the dynamics you're seeing and if there was any kind of large tender that contributed to that Rest of World Devices revenues.

Mick Farrell: Yeah. Thanks for the question. And yes, look, very good growth in our Europe, Asia, and rest of world device at 10%. Yeah. Multiple factors can come into that. You know, we have some markets where there are buyers that move ahead or behind like in Japan where it's more of a fleet approach. We have some areas in the world where you know, we have tenders that may come in and out. But roughly what we think is market growth for Europe, Asia, and rest of world for devices in the mid-single digits. So clearly, you know, there's some fluctuations there. We're not saying that there's demand generation activities have had that three, four, 500% improvement. Alright?

We're just starting our approach there. It's more in the tens of basis points of improvement that we're seeing from these early experiments. And so no change to actual market growth, but some pretty strong growth from ResMed in the quarter there. But we think going forward, it's sort of more in the mid-single digits. For devices in Europe, Asia, rest of world. Actually, same for our devices in the US. Any other color, Brett, you wanna provide on a country-by-country basis for Europe, Asia, rest of the world?

Brett Sandercock: No. I mean, international markets, we had a good quarter, and there's a good growth in Europe, some improved growth in China as well actually. Some really strong results through numerous markets and that's really contributed to that strong device performance.

Operator: Thank you. Next question is coming from Dan Hurren from MST Macquarie. Your line is now live, Marquee.

Mick Farrell: Definitely, MSG Marquis. Yeah. Look. Thanks, everyone. Look. Really good looking gross margin and even better guidance. Brett, can you just talk through the elements Brett, of that gross margin guidance and maybe touch on the FX, which is probably gonna get to you a little coming into 26.

Brett Sandercock: Yeah. Sure, Dan. Yeah. I mean, really pleased with the gross margin and really the team works really hard on gross margin improvement initiatives and you're really seeing that manifest in the gross margin. Clearly, we had some benefit from foreign currency, particularly the euro. The quarter. So if you looked at that sequentially, basically almost half that sequential improvement was FX. That means that just over half was actually going to be made through efficiencies. Now some of the large components around that were component costing improvements that we've been making. We've been making those progressively and they're starting to come through.

You've got freight was also a contributor because we've in terms of the sea freight to air freight ratio now, that is actually back to pre-COVID levels. So the logistics team has done a great job on that. And that you're seeing that comes from the gross margin expansion as well. And then we continue with things like the AS10 to AS11 transition and so on which has been ongoing. But is also a little bit of a tailwind for us. So they're probably the major impacts on that gross margin expansion for this year both year on year and sequential actually.

Mick Farrell: And I'll just pile on there. I think you know, I had a one on one with our chief supply chain officers just his one-year anniversary with ResMed. I think we've gone from ResMed having a good approach, of an almost an art type approach to a science-based approach and a lot of learning over this last year. And I you know, Brett ran our operations for over six months, and that strength between our financial teams and our supply chain teams is stronger than it's ever been.

And so that gives us the confidence with that guidance to say, actually, not only did we do really well in gross margin expansion in 2025, but as we look forward to 26, 27, '28, and probably not at those levels because they're extraordinary in recovery from a supply chain crisis, but we will be able to have sort of an ongoing pipeline of innovation that we can set up and tune up and turn on as we go towards our 2030 goal. And so it's not a one and done. There was some good reset and some catch-up.

But, actually, there's some sustainable improvements that allow us to give that guidance of 61 to 63 that you saw there, Dan. Thanks for the question.

Operator: Thank you. Next question is coming from Davin Thillainathan from Goldman Sachs. Your line is now live.

Davin Thillainathan: Hi, Mick and team. Thanks for the presentation. I guess I just want to discuss Virtuox. Thank you for the disclosures on the maturity of revenues. But I guess it's more interested I'm more interested to understand the roadmap for this business towards your acquisition. What are the areas of investment that ResMed will be making over the next twelve months? And also what are leading indicators that we can look at to assess those returns, please?

Mick Farrell: Yes, all really good questions. Look, we're really excited about VirtualBox. But VirtualBox isn't an acquisition on its own. You've got to think about it as a portfolio. So we've you know, if you look at the last twelve, eighteen months, you look at Ectasense and what we're doing with Night Owl, that fingertip size wearable home sleep apnea test. It's now FDA cleared and available, albeit our US sales meeting, America sales meeting, annual sales meeting, ASM in a couple weeks in San Diego, and that will be fully launched to our teams and education and driving it out.

And I remember, you know, a decade and a bit ago launching the ApneaLink Air, which we thought was the smallest and most capable device and yet some cloud connectivity. This is taking it to the next level and sending out a challenge to say, look, ResMed you know, we're the number one in therapeutics in 140 countries. We don't need to be the number one in diagnostics in 140 countries. But if there isn't if there aren't companies or not, there isn't an ecosystem of people driving home sleep apnea testing, smooth software, and scalable home sleep apnea testing, then ResMed is the global leader in this space has to step in. So we're doing that.

With that wearable home sleep apnea test from Nite Owl. Then you add on somnidoware, And, you know, Subath, the CEO of that is now head of our innovation and growth group. So we kept some great talent and moved in the business, but we kept that greater operating opportunity. And as you look at our AirView software and our Somnware, software, watch this space as we start to bring those types of things together to create seamless and frictionless flow of patients through the funnel. Then to your question, VertuWops, that fits in at the next phase, which is look. Home sleep apnea testing is the scalable part. Our sleep labs are amazing partners, but they're full.

They're full, and hospitals, you know, are coming back post-COVID and aren't expanding their in-lab testing capabilities. So we have to expand home sleep apnea testing. We have to bring down those wait lists that went up very high during COVID and get that backlog down. And so we're doing that in the in-lab. And we bought VirtualBox as the number one provider to drive home sleep apnea testing to show it can be scaled. And so watch this space as we invest in our marketing and capabilities. Obviously, look. Our virtual ops teams are now our core sleep health teams are separate sales teams. Can be partnerships where we see opportunities where wait lists are high.

Hopefully, apnea testing can scale. And so we'll look for opportunities to say, where is the best, you know, need Where is the most need for home sleep apnea testing to scale? And so watch this space as we do that. And this is not a step change with some sudden huge uptake of patients through home sick apnea testing. But I can tell you in the arms of a strategic versus private owners, I think home sleep apnea testing companies like VirTrak will do better, and we're the only strategic investing in this. And I think it's the right thing to do.

As we talk to our HME partners, the message to them is this is fantastic because we're gonna bring more and more patients to you. As we talk to our Fleet Lab partners, we say, hey. Here's another tool that you can use the patients who are big on the waiting list that you know a very high probability obstructive sleep apnea. So that you can have the complex cases that might have central sleep apnea, complex sleep apnea, COPD, overlap syndrome, complicating cardiovascular disease or post-stroke, do all of them in your lab. Have the complex cases in your lab, and let's free up that capacity for them.

And they, you know, they end up on S, ST, STIs, and ASV type therapy, which is good. Margin for Esben and really good for the patient because they get the care they need. And expand with home sleep apnea testing. So our goal is really VirtualBox is part of a long-term play here. There's no simple win in this quarter. As Brett said, it wasn't material to our global results. But we did want to give you visibility on the revenue and size of it just because you know, we don't want you to think it's bigger than it is or smaller than it is. But we are going to scale this.

And, actually, I want the competition to scale up too. I want a strong competitive diagnostics space there. Because it's really important that we help all across the 50 states that we operate with VirtualBox. And frankly, why can't we have models like that in a hundred and countries that we operate in too? So I spent a long time on that question because it's a complex one. But watch this space. We'll keep giving you updates every quarter. On not just Virtualbox, but that ecosystem of Ectosense, Sovereignware, VirtualOx, and what ResMed's doing to free up the funnel and have more and more of the 1 billion people sleep apnea worldwide get their way through the funnel.

And we'll talk about insomnia and respiratory insufficiency as we go, as we look for ways to improve those pipelines as well. Thanks for the question.

Operator: Thank you. Next question today is coming from Saul Hadassin from Baron. Yes, good morning.

Saul Hadassin: Mick and Brett. Just a question on US mask growth. Once again, low double digits. Seems to be ahead of what you described growth at as high single digits on the last quarter. So just wondering if you can go into a bit of detail as to how much you think that is share gains versus just stronger growth in resupply overall at an industry level. Thank you.

Mick Farrell: Yeah. Thanks, Saul. It's a really good question, and you nailed all the elements of it. Right? I do think as we look at that AirTouch N30i, I don't know if you've seen the physical product. You know, Brett, Sally, and I are doing a road show through Sydney, Melbourne, and Singapore. So for those investors that we see, I'm gonna bring a sample of that with you because it's that type of idea of bringing fabric to the part that is the pure patient interface. We call that whole thing a patient interface.

But the part that touches your nose going from silicon rubber is the last thirty-five years of everyone in the space, including ResMed, the market leader, to now having fabric there. I think that innovation is not only incredibly technically difficult to do at scale and manufacturing levels that we do in multi-cabinet tools and the high-pressure temperature liquid silicon rubber, but it's so impactful for the patient. And it's so comfortable for the patient. And the patient then loves that and wants to have it in our cash. Markets and then in our RT driven markets where home medical equipment respiratory therapists do set up, they see how comfortable it is.

Many of them are patients well and recommend it. So I think there is some share gains from the 40, which is in our full face category or oral nasal mask category. Those are doing really well. But, look, it's a competitive space. There are competitors out there. So I think some element of that competitive share taking, but I think there's other elements. As you said, it's resupply and frequency around resupply. And contact around resupply and getting better. At Brightree, getting better at ResMed resupply, getting better at contacting consumers through MyAir and beyond. So watch this space. I think you'll start to see us enhance our resupply approach.

And, yeah, I think the market growth rate is high single digits. We were ahead of it for the quarter. You know, we're gonna be ahead every quarter. Too low. So you're still on. I don't think our SG&A investments are great, Saul. But anyway, I'll finish that with I'll finish with the masks and so on, grow in US, Canada, Latin America, very solid in the quarter, and expect us to continue to drive those resupply programs in partnership with our HMEs in partnership with our Maya platforms.

And, you know, I mean, if you look at Eurobasia Rest Of World, I Think We Can Do Better At Resupply In Some Of Those Markets Where We're Leveraging Our Own Technologies Like MyAir And Beyond. So, You Know, Mixed Bag On That Front, But We're Very Happy With The Performance In The US and Latin America. Thank you for the question, Saul.

Operator: Thank you. Next question is coming from Anthony Petrone from Mizuho Group. Your line is now live. Thank you. Congrats on another strong quarter. I have two quick ones. I'll just throw them out. The first one, Matt, competitive bidding. The proposal is calling for maybe just a consolidation of the number of contract suppliers out there. That just seems like a pretty good draconian proposal. Maybe just walk through that a little bit. You know, if that does kinda stick in the final rule, like, how rapidly do you think consolidation occurs in the DME space? And then on the second question is a broader strategy question.

Mick, you've sort of commented in the past that ResMed today is a one-stop shop for sleep apnea but certainly wants to continue to expand across the spectrum. So maybe talk a little bit about oral drugs. There was a favorable outcome there from APNIMED phase three study. Just the latest thinking on hypoglossal nerve stimulation? Thanks.

Mick Farrell: Thanks, Anthony, and thanks for the multipart question. I'm still writing it down. And your line, it will remain live through the question, so we can have the conversation just as heads up. Correct. Yeah. So competitive bidding, I'll start with that part. Look, you know, this isn't our first rodeo. Think this was announced when I was running marketing in 02/2005, and over CEO in 2013 in the midst of round two, one, two, two a, two b two c, three, and our last round, round four where we saw an uptick from our HME customers are actually bidding up against the proposal such that CMS just said, okay.

Let's go back to where it was and add inflation adjustments these last four years. And so we're watching it very closely. Yeah. Look. The guidelines aren't clear yet, and they haven't everything. And so we're in a comment period. We're gonna talk and work with AA Homecare and Abimed and give out feedback to Washington. I was there in Washington just last month in CMS, you know, with doctor Oz and team, and I was also, over at HHS with the folks in RFK juniors, you know, office there. You know, so they're listening. This administration is listening and taking feedback. From industry. And so we're gonna give that feedback.

And just make sure we protect patient care, protect HMEs right to be able to freely access, and really to make sure beneficiaries of US Medicare have a chance to get access to great therapies like ResMed has. So it's all about the patient. We'll be advocating for that. Yeah. With regard to consolidation, we've seen, you know, a lot of consolidation these last ten years of competitive bidding going through, but it's not really driven by that. It's driven by efficiencies and capabilities. ResMed's job is to support all our customers. You know, small mom and pops, medium-sized regionals, and large regionals as well as the big nationals.

And with technologies like Bright you could be running a small regional as efficiently as some of these large nationals. So we wanna support a whole ecosystem. Sometimes the care by a local is just as good or better. So all the customers are important to us. And I think we've seen some really good I would say, infrastructure investments by our HME providers. And some mature approaches to this. So I think we're gonna do very well through this. Competitive bidding environment. And as we read through the rules there, they seem mostly in line with the last round and some improvements. We have suggestions. We'll make specifically to Washington. Two questions about a one-stop shop for sleep apnea.

Yeah. Look. ResMed stands for respiratory medicine. And residential medicine. It doesn't stand for just CPAP. And we've had more than a decade of being the best provider of not just CPAP, APAP, and bilevel, which we've done for thirty-six years, but over a decade of providing mandibular repositioning devices, which is, you know, if CPAP, APAP, and bilevel are the gold standard, which they are, think Olympic medals, the silver goes to dental. MRDs. And so ResMed is the number one provider of 3D printed dental devices in Western Europe, Northern Europe, and beyond and everywhere where there's a good economic model for the consumer to get access to dental care.

Can't tolerate dental, which both of them are relatively noninvasive relatively affordable, and use natural things like air and water, very much in line with the sort of make America healthy again and actually European sort of naturalist approaches and cost-effective approaches of any payer, then you might end up, if you can't tolerate those, on the third-tier therapy. And I think there's a range there. There's GLP ones for pharmaceuticals.

I think they've taken the wind out of the sails of APNIMED, frankly, because GLP one not only half treats, you know, I'll say half treats because it's about an AHI reduction of 50%, so some of the apnea leaves a lot of residual and should be used in combination with gold standard and physicians know that. But it does that and some diabetic improvements in cardiovascular and all those. And so I think it's more likely that a Zepbound or that type of drug would be used as that third tier versus an apnea, which only half treats the apnea. But we'll watch this space. We're an investor there. Obviously on the advisory board.

And, yes, I wanna keep you know, the one-stop shop thing for me, Anthony, is about ResMed keeping a relationship. With the person who suffocates. And if they are on CPAP, APAP bilevel, we've got an intimate relationship. On dental, we've an intimate relationship. If they're on those third-tier therapies, whether it's a drug, a hypoglossal nerve stim, I wanna still have that relationship because guess what? Those drugs may not be inherent for life. Even an implant might not be something they wanna keep turning on because of side effects or whatever. I wanna have a relationship so I can bring them back and get them a chance to get the gold standard.

Because as professor Jean Louis Pepin from Grenoble University in France says, he says the best alternative failing positive airway pressure therapy is positive airway pressure therapy again. And so I wanna keep that relationship. That's that. And I think I included the answer to your third question there on APNIMED in that last one. So thanks for the triple there, Anthony, and we'll talk to you soon.

Operator: Thank you. Next question today is coming from David Bailey from Morgan Stanley. Your line is now live.

David Bailey: Yes, thanks. Good morning, Mick and Brett. You sort of touched it on the last question there, Mick. But just post the Zepbound label, interested in your observations around new patients coming into the system and then maybe any feedback you can provide around the physicians prescribing patterns post that label if they are starting to prescribe GLP-1s in conjunction with CPAP? Any observations on those two would be appreciated. Thank you.

Mick Farrell: Yeah. Thanks, David. And very good question. Mean, it allows me to talk to a bit broader on that sort of demand generation part of it. And we're watching very closely. We updated our numbers so you'll see that in the book later. But it's really it's sort of well north 10% increase rate. I think it's now eleven percent increase rate of a patient with a GLP one prescription starting CPAP APAP available versus those who don't have the code that they have had a prescription for GLP one. So that's you know, strong and just getting a little stronger of that I'm a motivated patient.

I've come in for this new pharmaceutical capability, which has the cardiovascular promise, the diabetes promise, the half treating of sleep apnea promise, this I don't know, I'll call it the Kim Kardashian or Botox effect. Right? This aesthetic effect. And so they come into the primary care physician wanting that, the GP wanting that, But then when the when the when the PCP when the GP sees they have apnea, they're writing a prescription for CPAP. Like, it's happening because you know, in The US, there's you'll get sued if you don't give gold standard therapy if you don't offer the standard of care. But, also, there's the Hippocratic oath, and they know.

That this is completely reversible, very cost-effective, and a 100% effective if used as directed. And so that's why we're seeing that, I think, that 11% start rate. And you look at one year and two year, and those are unchanged. They're north of three percent higher resupply rate. For GLP one prescribed patient versus control for one year. And then north of five percent higher resupply rate at two years, and those numbers are steady. So you can see those in the numbers we got now, our report this quarter. Look, we're not gonna rely just upon you know, Lilly's have got the IFU for Zepbound to say, well, that's our demand gen. We don't need to do any.

We're gonna do what we said earlier. We're gonna do these consumer-directed approaches in particularly our omnichannel markets, but we're also gonna do it in our primarily health care-driven markets. Health care insurance-driven markets like The US, France, and Germany because it's a combination of all the above. But it will be a contributor to us. These patients are coming in. And you heard in my prep remarks the focus on CME that continuous medical education.

That's huge to make sure that a primary care physician and we're targeting ones that are high volume GLP-1s, that have prescribed them before and are likely to be where people go we're educating them about gold standard, silver, and bronze for sleep apnea therapy showing them CPAP, APAP, and bilevel are there, and helping them set up home sleep testing pathways. So very early days in demand gen from ResMed driven, and pharma-driven and, I would call, consumer tech wearable driven. But we are starting to see some results in specific markets with more to come. Thanks for the question, Dave.

Operator: Thank you. Next question today is coming from Brett Fishbin KeyBanc Capital Markets. Your line is now live.

Brett Fishbin: Hey guys, thanks very much for taking the questions. Just wanted to circle back on the gross margin question from earlier. I thought the answer on 4Q drivers was very clear. Just wanted to follow-up more on the FY 2026 guidance. 61% to 63% represents 200 bps year over year at the midpoint. And 300 bps at the high end. So pretty significant there. And was just hoping you could talk through maybe the primary driver supporting that level of expected improvement. How much do you think is coming from the FX movement this quarter? And then any considerations around seasonality or phasing we should be thinking about? Thank you.

Brett Sandercock: Sure, Brett. I'll take that. So, it's Brett to Brett. Yeah, yeah. So it's good to see my namesake here. So, yeah, I mean, we've got that the guidance there is sixty-one to sixty-three. We're kind of at the lower end and then we progressively improve that. So that's how we're kind of thinking about it. And then what if we kind of what are the drivers going to be through FY '26? It's probably what I talked about continuing theme, but it's really that pipeline of cost of the optimization initiatives. So it'll be around procurement initiatives, it'll be around manufacturing improvements in terms of how we balance that, cycle times, all that plays out. There'll be scale benefits.

We want to keep going with our logistics efficiencies as well. We've made a lot of inroads obviously on that. Over the last twelve months. So we think we can be some there that we have still to get I think on logistics efficiencies and we'll keep working on that. The transition of AS10 to AS11 platform will continue to play out. Obviously, a lot of that has played out but there's still play out through FY '26. We're probably likely we'll probably have a natural kind of product mix tailwind probably favorable. We think going into FY '26 then new product introductions always give you an opportunity as well through that.

So they're kind of there's no one silver bullet on this. It's really about really strong execution to drive that on multiple fronts. And that's how you have to tackle it.

Brett Fishbin: Very helpful. Thank you. Next question today is from Matt Taylor from Jefferies. Your line is now live.

Matt Taylor: Hi, guys. Thanks for taking the question. I did wanna go back because you had so much experience with competitive bidding last time. Maybe you could just summarize in your words the impacts that it did have on your business and maybe more importantly didn't I know there was a lot of concerns covering you back then, and then ultimately, it wasn't that bad. And could you draw any lines from that situation to what may happen now?

Mick Farrell: Yeah, Matt. It's really good. And I know we've only got three minutes left here, I'll do my best to summarize the last fifteen years or so of this. And, yeah, you know, when I took over as CEO, the thirteen years ago twelve thirteen years ago, we're in the heat of it. And I've been running The Americas before that. And we were in the heat of it. And so a lot of learning. I'll do my best to say, I think you know, when this sort of started round one, round two, Medicare reimbursement was very significantly above private payer reimbursement.

And so, you know, you really couldn't argue the justification of not doing the program because government was paying a lot more than private payers. As I look at it now, Medicare and the private payers are very much in sync. The private payers, you know, there's lots of them and there's 50 states and there's, you know, it's like two fifty data point matrix with five payers in 50 states. But they mark to market on a very regular basis annually or even quarterly in summon. And they're there. The government is right in line with them.

And as you saw in the last round, that round four in 2021, we got a very mature HME provider population who looked at their and looked at the capabilities and bid appropriately. And it was slightly above the rates that were previously there. And so then the program went back to what I call just CPI or inflation-based adjustment with some efficiency measures these last four years. I think if you know, as I look at the rules and I look at all the stuff that we've seen so far, looks pretty similar to that last round. There's some justifications of different percentiles and different averages and some questions we have that will get sorted out.

But it's really it's not that different. To what we've seen before, and the rates aren't that different. From Medicare to private payers. So I think, I won't say it's gonna be a nonissue. I think for our HME customers, we wanna work really closely with them and help them and through our industry associations and so on, we will. And we're gonna support them through this. But look, ResMed doesn't bid directly. So we don't we're not directly involved in the program. But all I can say is it's pretty benign. I don't think there's gonna be any major perturbations.

And as you said, we got through what was pretty dramatic changes fifteen years ago and ten years ago very well. Actually, we grew very well through that. This has been a much relatively a much more minor change, and I think we will power. And I think our customers will power through too. But I think most importantly, Medicare beneficiaries who pay the taxes that drive the government money that supports the Medicare and Medicaid programs, they will get access to care. And ResMed will fight for the patients, particularly in rural areas that they get access to care. We've been very strong in advocating for that, and we'll continue to do so. Thanks for the question.

It was a great one, Matt.

Operator: Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Mick Farrell: Great. Well, look, thank you for joining us on our earnings call today. On behalf of the more than 10,000 ResMedians operating in 140 worldwide. I'm very pleased that we're able to deliver another very strong year of performance and to build value for all of you, our shareholders. We look forward to speaking to you, many of you, over the coming weeks, and we'll see all of you in ninety days. Sally?

Sally Schwartz: Thank you, Mick, and I'll echo Mick's thank you to everyone for listening. We appreciate your time and interest. If you have any additional questions, please don't hesitate to reach out directly. Kevin, you may now close the call.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.