Our concern is really getting after new business converting customers to Masimo technologies and placing the equipment in there and return for those recurring sensor revenues that’s going to continue to help us grow in the outlook that we’ve provided for this year.
Jason Bednar: I guess Micah what’s the disconnect between record contracting, which – and new customers, which theoretically they need drivers to consume the sensors? Why isn’t that translating into a better driver number and we’re seeing this driver number decel?
Joe Kiani: Let me maybe take this. So 20 years ago, every driver was a new driver for us and it was growing our sensor business. Today, given that we have a significant market share the new – every new driver is not a new driver that you see. It’s replacing an existing Masimo socket. So that’s why that is not as important. Now the second part of your question is what’s the disconnect? Well it doesn’t take as many drivers for us to secure these big TIs, $400 million worth of them because it’s basically we put the number of sockets that they need that have to be replaced to get that sensor contract. So that’s why this is not a one-for-one to see a doubling of our contract wins with a doubling of our driver volumes.
Jason Bednar: Okay. Okay. I’ll probably follow up a little bit on some of this. But just maybe here I do want to ask one more maybe tough one here so maybe I’ll apologize upfront. But there’s definitely a lot of interest here on this topic just with the latest developments with the Board. Joe from your public commentary still sounds like there’s maybe some difficulties in the Board room to put that maybe gently. The announced departure here recently of a Board member, you didn’t fill any of those vacated committee positions with Board members that were elected during last year’s shareholder vote cycle. Maybe help us through what the latest discussions have been regarding the business strategy with your Board members that were elected last year whether there’s been any progress made on finding common ground between your position and where currently stands?
And then if you’ll comment I think a lot of investors would be interested to hear your thoughts with respect to the kind of the upcoming shareholder vote that we’re all looking ahead to this summer.
Joe Kiani: Well first of all, I won’t lie, it’s been a rough start with the new Board members. But we’re managing. Things are getting better. We’re getting along better. We’re finding more common ground. And yes, we’re sorry to see Adam Mikkelson leave but Adam had served exceptionally well. But he had a lot of personal things he had to attend to including twins that were just recently born. We wish him well. He’s going to miss all the fun here. But we intend to replace Adam, but we’re going to find hopefully someone that is well suited for that position. And the new Board members from the ones that the shareholders voted in the activists, which are Quentin and Michelle, who do sit on our committees, audit, comp, governance; but also the new Board members Bob Chapek and Rolf Classon, they sit on many committees now.
So look, before the election, we had Board members that have been here for five to maybe 15 years that was me I guess 35 years. But now I think we only have one Board member left that has a tenure of more than one year. So the rest of them have been here now for just from a few weeks to a few months.
Jason Bednar: Okay. Thank you.
Operator: Our next question comes from the line of Jayson Bedford from Raymond James. Please go ahead.
Unidentified Analyst: I am sorry. This is Eric on for Jason today. Just a couple of clarifying questions. When you’re thinking about the wearables and hearables and STORK, I’m just trying to figure out is STORK going to be reported under the healthcare revenue segment and wearables will be non-healthcare? And I guess where does W1 fit in that?
Joe Kiani: Well, I’m glad you asked that because I want to make sure you understand our definitions on how we segment. First of all yes, there’s a healthcare segment and a consumer segment. So something like Stork with prescription is certainly going to be under healthcare. But it doesn’t mean that it’s not considered a wearable. So our wearable definition is all of our sensors that attach to the body and do not have a cable connection to it for continuous monitoring. It started off with Radius-7 and then Radius PPG, Radius VSM, W1, Radius T. So those are definition of the wearables. And Stork by the way is a wearable. As far as other products that will enter the wearable category, it will be hopefully Freedom and the Freedom band.
And then there’s a whole host of wearables we’re working on for other measurement modalities. And on the hearables, it’s the headphones both in ear and outer ear. And it will include not just our regular hearables that we have today but the hearing aid as well.
Unidentified Analyst: And sorry just to make sure I understand. Anything that’s wearables that’s healthcare revenue and then the hearables is in the non-healthcare revenue? Just want to know just for — looking at the growth?
Joe Kiani: No, the hearing aid will be considered healthcare but it will be part of the hearables. Just like Radius PPG is the healthcare product but it’s part of the wearables.
Unidentified Analyst: Okay. And just one other follow-up. I’m specifically looking at stork and W1. I know earlier last year you talked about — obviously there was a little bit more delay in getting the FDA approval than we had all hoped for but you had mentioned an expectation of about a 1% revenue contribution in 2023. Is that — I assume that didn’t hit that number but is that a number for 2024 to look towards?
Joe Kiani: Well, I don’t know what all of our wearables did but I think Stork did about $2 million of revenue last year. And while it is great that by the year-end we got FDA clearance for Rx that wasn’t long enough to really take advantage of it last year. But also we still don’t have FDA clearance for OTC and until we get that it will impact our STORK business, because we can’t alert parents to alarms for SpO2 and pulse rate without a prescription. So once we get the OTC clearance then we’ll be able to alert parents even without a prescription for SpO2 and pulse rate dangers. Right now we can only alert them on temperature dangers and for those who’ve gotten the prescription for Stork, they can get alerted for SpO2 pulse rate as well.
