Joe Kiani: Thank you, Micah. With deeper understanding of post-pandemic market conditions and a strong start to the year for our healthcare business, we are confident in our guidance and look forward to reestablishing our track record of consistency and predictability. Besides strong sensor orders, our record customer conversions in 2023, provide the foundation for that confidence and show how our commitment to delivering innovative technologies into the marketplace sustains not only our long-term future but the short-term growth potential. I’d like to share a few new highlights on products that we have gotten approval by the FDA in late 2023 that we expect to contribute to growth over the next few years. The US approval and launch in October of our Oxygen Reserve Index or ORI was an important milestone that will add to the growth of our rainbow products.
ORI has already gained significant traction outside the US with ORI-equipped sensors becoming the routine option for pulse oximetry monitoring in some countries and now accounts for approximately 20% of rainbow sales. ORI gives our customers the ability to see declines in oxygen before pulse oximetry can detect some changes, which is important in the OR. It is just as important to know when the patient has been given more oxygen than they need, and ORI can help them determine that. For our business, not only ORI is yet another clear differentiator but every pulse oximetry sensor conversion to a rainbow ORI-equipped sensor adds a price premium of at least 30% per sensor depending on whether customers deploy ORI with our 4-LED rainbow sensor or with our 8 or 12-LED rainbow sensors.
Another important FDA clearance for us last year was for the medical version of our W1, watch which was cleared in November. We can now promote W1 to US healthcare institutions for use with patients before and after surgery as well as for long-term monitoring of chronic conditions. As we’ve shared in the past, we see great market potential for these applications and have received multiple indications of interest from hospitals. Hospital-at-home initiatives continue to gain traction with healthcare systems which see large opportunities to reduce costs and improve outcomes. We view our remote monitoring technologies as unique key enablers for these programs to deliver care safely and efficiently. We also received FDA clearance in December for our Stork baby monitor with alarms and alerts functions to be activated based on the physician’s prescription.
Stork is the only product to help parents monitor SpO2 pulse rate and temperature for sick and healthy babies. In addition, the optional AI-based camera already helps detect babies who roll over on their stomach with many more applications to come. Outside of healthcare, we are leveraging our core healthcare technologies and signal-processing capabilities to deliver differentiated products that will profitably take share in the large and growing markets for hearables and wearables. Our hearables category grew 115% last year due to the combination of focused investment and the launch of new products. For example last fall, we launched a Denon PerL earbuds with AAT, adaptive acoustic technology. Masimo AAT enables customization of the sound spectrum for an individual’s unique hearing profile and provides a truly optimized listening experience.
As I mentioned earlier, hearables and wearables are strategic growth categories for Masimo as we undertake our hospital-to-home initiative. In 2023, we increased our revenues for these products by more than 90% to reach $90 million. With products such as STORK, OTC pending FDA clearance, W1 and PerL with AAT, along with other new product introductions, we expect to see significant growth in this category in 2024 and beyond. We have three product launches planned for 2024 to celebrate our 35th anniversary, Freedom, H1 and the next-generation version of our Root Connectivity platform. We are excited about what the Freedom biosensing watch and the H1 hearing-enhancement device will do for consumer health and what our next-generation Root platform will do for healthcare in terms of improving patient care as well as hospital finances.
In closing, our ability to translate our core technologies and competencies into products that deliver better outcomes for consumers, patients and providers continue to be the engine for long-term growth across all our businesses. With that, we’ll open the call to questions. Operator?
Operator: [Operator Instructions] Our first line of question on from Marie Thibault with BTIG. Please go ahead.
Marie Thibault: Hi. Thank you. Good afternoon. Thanks for taking the question. Wanted to start here, I think, on the standard one on guidance. I just want to understand what’s included on the high and low end of the guidance ranges for both healthcare and non-healthcare. And if you can help us think about the Q1 cadence, the quarterly cadence throughout the year, that would help me understand, particularly on the non-healthcare side, if you can.
Micah Young: Absolutely. Yeah. So Marie, for the — start with the healthcare business, the $1.345 billion to $1.385 billion. If you look at the low end of the range, we’ll start there, that assumes 0% census as far as any contribution from inpatient admissions. And it also assumes the weak capital environment that we’re seeing. We’re seeing good strength in our consumables products, but the capital has continued to be a very difficult environment for us as well as others. If you look at the higher end of the range, that assumes more of closer to a 1% census growth, and it also assumes that we see improvement in — coming from a lot of the installations that we expect throughout the year as we continue to gain new customers and win new customers.
And it also assumes that we’re going to have some improvement in the capital environment at the high end of the range. We also have stripped out any large orders, so those would be upside to the guidance for this year. Those were completely stripped out of that range. If I turn to the non-healthcare business, probably the best way to describe that is we expect the hearables growth to continue, that we expect to be at least 50% growth off of this year after a very strong growth last year. So that implies that the range of $700 million to $780 million, at the low end of the range, it would imply high teens decline in the core audio business and the upper end of the range, it would imply a mid-single-digit decline in the upper end of that range.
