Price, page-23

For what it's worth, I didn't completely sell out, but I did reduce my holding from 8% down to 4% of my portfolio. 8% was getting uncomfortably high for me, so my decision was a mixture of portfolio construction and a reaction to the Brightree acquisition.

The acquisition was large, and non-sensical (in my opinion) and it did make me question the quality of the management in place. But, I also think it needs to be considered in the context of the whole business.

At $800m the acquisition represents less than 10% of the value of primary business (ie treatment of sleep respiratory disorders) which I think we'd probably all agree is a solid business. Furthermore, RMD ran a very conservative balance sheet prior to this acquisition and even adjusted for the acquisition, net debt sits at less than 1x NPAT. A very manageable position, I believe.

Of equal concern to me at the moment, is what level gross margin will settle at following several years of decline. Which interestingly, if you are to believe managements assertions, the Brightree acquisition will assist in this by being gross margin accretive.