So, between those things, we feel good about getting up in that mid-60s margin over the next few years. And then we just got to continue that path and leverage the business and get back up into the high 60s. So that’s going to be a great lever for us as we move forward and really deliver additional growth in earnings as well.
Eli Kammerman: Operator, next question, please.
Operator: Yes. Our next question comes from the line of Mike Matson with Needham & Company. Please go ahead.
Mike Matson: Yeah. Thanks. So I wanted to ask one. Joe, you mentioned you were launching the H1 hearing-enhancement product this year. And I know that’s an area you kind of talked about sort of indirectly being interested in, but you haven’t really mentioned much specifics around products or timing. So it sounds kind of interesting to me. So I was just wondering if you could provide any more detail around that, maybe the kind of market opportunity and so forth.
Joe Kiani: Sure. Thank you. Yeah, I think as I’ve mentioned before, one of the reasons we acquired Sound United was for their audio engineers as we were planning to get into the hearing aid market for low to moderate hearing loss. So with the help of that team, the help of the neuro team in Australia and our own engineering team here in Irvine, we are developing what I hope will be a revolutionary hearing aid. And we call that H1 for now, that might stick as the final name. But I think H1 should be available for sale this year.
Mike Matson: Okay. And do you have any feel for the TAM or pricing or anything like that at this point?
Joe Kiani: Yeah. My understanding, the TAM is $35 billion roughly. And our pricing is probably going to be around $1,500 in that area. That’s what we’re planning. Now, we — to sell that over the counter, which now we can with the new regulatory guidelines that have been changed, we still have to get FDA clearance. So we’re going to have to submit the H1 for FDA approval for sale in the US but many countries will be able to sell it under our CE Mark.
Mike Matson: Okay. Got it. And then just on the — all the contract wins are obviously positive. Just wondering, to what degree has kind of the uncertainty around your primary competitor, Medtronic, separation and now kind of retention of their monitoring business? Is that — do you think that contributed to customer willingness to kind of switch to Masimo or…
Joe Kiani: I don’t think so. I think what really changed our market share of gains was COVID. I think when pulse oximetry and its accuracy really meant a lot, people started thinking, well why am I not using Masimo? And on top of that we created the Radius PPG, which is a tetherless wearable monitor that change things. We created the COVID system for patients at home remotely monitoring them at the hospital. All of that just made us really the company to go to for pulse oximetry. I think that’s one of the reason. If you look at 2019 we were doing about $170 million in TI through incrementals and now we’re doing about $400 million. So, yes, we don’t think it had anything to do with the spinoff or not. We really think it’s — just finally make people think why are we resisting it.
As you know already no other pulse oximetry has been shown to have a positive clinical outcome despite the fact that they became ubiquitous before we even entered the market. But ever since Masimo SET pulse has been introduced because it works accurately during motion at low perfusion because it works on dark as well as light-pigmented patients during other challenges the studies have been incredible with blindness in the neonatal ICU has dropped detection of CCHD is not possible with newborns. And people on opioids are not dying from overdose on the general floors after their surgeries. So — and all of that by the way comes with reduced costs. We calculate that on average a 250-bed hospital can save about $4 million to $5 million a year by switching to Masimo.
That really makes our pulse oximetry sensor prices irrelevant because we could charge 5x more and we’d still be showing cost savings to the hospital. So the competitive advantage we have is really big. And I think customers during COVID finally decided to take advantage of this.
Mike Matson: Okay. Great. Thanks. Bye.
Joe Kiani: Sorry for the long answer but I just want you to understand this isn’t just two companies competing with similar technologies. There’s a huge difference. And that’s why we’re winning continuously and it has become even bigger in the past few years.
Operator: Our next question comes from the line of Jason Bednar with Piper Sandler. Please go ahead.
Jason Bednar: Thanks. Good afternoon. Thanks for taking the questions. Joe, Micah I wanted to start with that driver number. Definitely lighter than our model. I think they’re probably lighter than where most estimates were sitting here. I think the lowest absolute figure you’ve had since the first quarter of 2018. I guess we can look at these two ways. You put up good results in spite of those driver sales being lower. You’re tapping into that large installed base really driving better utilization. So maybe the driver figure means less today than what it has historically. But I guess the alternative here is that drivers have fallen for four consecutive quarters. And I guess I’m just having a hard time reconciling this against like that record contract that we continue to hear about.
So I guess the question here is whether investors need to be concerned with the driver decel? And then what’s the outlook for this line as we look ahead? Drivers grow in 2024 does this need to decline further? Any help there would be great.
Micah Young: Yes. Thanks, Jason. Yes I am less concerned about the driver numbers. We think this is more short-term in nature. The focus for us is — and what we really focus on internally is that the incremental new business and contract wins. And that’s what’s giving us the confidence with our outlook. We are coming off of transition from years where there’s a lot of monitoring those put by the bedside. And we think that the replacement cycles of existing equipment have slowed temporarily. We believe that it will kind of trough — our expectation is the trough in Q1 and then it starts to improve back up to more normalized levels as we exit this year. So we think it’s going to start heading the right direction based on our internal estimates and that’s less of a concern for us.
