ResMed Inc.
CEO : Mr. Michael J. Farrell BE, MBA, SM
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 15.5% YoY | 21.1% | 10.9% | 2023-01-26 |
Mick Farrell says,
Sales Growth and Demand
- Solid performance across the business driven by strong sales growth in the Americas region due to increased production and delivery of flow-generated devices
- Ongoing high demand for sleep and respiratory care devices worldwide
- Strong mask sales growth across the globe reflecting post-COVID pandemic awareness of respiratory hygiene and respiratory health
Device Production and Delivery
- Increased production and delivery of devices to meet customer needs and especially patients
- Supply environment improving every week, every month, and every quarter with access to specific electronic components increasing
- Confident in ability to fulfill all customer demand before the end of calendar year 2023 with steady ongoing incremental device revenue growth in the third and fourth quarters of fiscal year 2023
Device Innovation and Growth
- Launch and acceptance of AirSense 11 device platform going well with strong adoption of myAir patient app
- Increasing production and delivery of fully connected AirSense 10 and fully connected AirSense 11 devices to phase out AirSense 10 Card-to-Cloud device and refocus on growth of 100% cloud connectable devices globally
- Continued growth and adoption of ventilator devices around the world with ongoing adoption of Propeller’s monitoring system and investments in home-based high flow therapy for treatment of COPD in the home
Software-as-a-Service (SaaS) Offerings
- SaaS fast business grew 18% year-over-year with high single-digit organic growth of US-based SaaS business at about 7%
- Acquisition of MediFoxDarn, the leading provider of end-to-end software solutions for nursing homes and home health customers in Germany, closed and focused on integrating and growing business to accelerate SaaS innovation and growth in Germany and beyond
- Brightree ReSupply program automates entire process to keep CPAP, APAP available therapy user replenished with supplies, resulting in higher adherence to therapy and 39% reduction in mortality for patients who are adherent to CPAP versus control
Digital Health Industry and ResMed’s Mission
- ResMed’s chief medical officer named Chair of Board of Health Division of Consumer Technology Association, which focuses on consumer-based technology-enabled health solutions to deliver better health outcomes for patients and reduce overall healthcare costs for the healthcare system
- ResMed’s mission is to improve 250 million lives through better healthcare in 2025 by delivering device platforms, full mask systems, and digital health software solutions to help people sleep better, breathe better, and live higher quality lives with healthcare delivered in their own home
Brett Sandercock says,
Revenue Growth
- Group revenue increased by 16% to $1.03 billion in the Q2 FY 2023 and revenue increased by 20% in constant currency terms.
- Revenue growth was due to increased demand for sleep products and ongoing increase in device demand generated by competitors’ product recall.
- Year-on-year movements in foreign currencies, in particular, the weaker euro negatively impacted revenue by approximately $36 million this quarter.
Geographic Revenue Distribution
- Sales in US, Canada, and Latin America countries increased by 26% and Sales in Europe, Asia, and other markets increased by 8% in constant currency terms.
Product Segment Revenue Growth
- Globally, device sales increased by 25%, while masks and others sales increased by 13% in constant currency terms.
- Device sales in the US, Canada, and Latin America increased by 41% as we benefited from incremental revenue derived from the introduction of the Card-to-Cloud device and improving availability of our connected devices.
- Masks and other sales in Europe, Asia, and other markets increased by 14% in constant currency terms.
Operating Expenses and Profit
- Gross margins declined by 80 basis points to 56.8% in the Q2 FY 2023.
- SG&A expenses for the second quarter increased by 14%, or in constant currency terms increased by 20%.
- R&D expenses for the quarter increased by 4%, or in constant currency terms, increased by 15%.
- Operating profit for the quarter increased by 14%, underpinned by strong revenue growth, partially offset by lower gross margin.
Acquisitions and Debt Position
- Completed acquisition of MediFoxDarn for consideration of $997 million and this was funded through a drawdown on the existing revolver credit facility.
- Recorded acquisition related expenses of $8.4 million associated with the MediFoxDarn acquisition.
- The acquisition was EPS neutral on a non-GAAP basis in Q2 and expected to be mildly accretive to EPS on a non-GAAP basis in the second half of FY 2023.
- Ended Q2 with a cash balance of $253 million.
- At December 31, had $1.8 billion in gross debt and $1.5 billion in net debt, reflecting the funding of the MediFoxDarn acquisition.
Q & A sessions,
AirSense 10 Card-to-Cloud Inventory
- Working through inventory quickly and expect to meet customer demand for AirSense 10 Card-to-Cloud by end of the year
- AirSense 10 fully connected is the number 2 device in the market and AirSense 10 Card-to-Cloud is the third best device
- Excess patient demand still there globally and ResMed expects to change 250 million lives by 2025
Lives Changed Measurement
- Lives changed formula includes CPAPs, APAPs, bi-level devices, full mask systems, and patients’ lives touched through digital health
- Goal to change 150 million lives by 2023 with a CAGR of 17.5% volume growth
Patient Demand and REPAPs
- Focusing on excess patient demand and working to increase supply globally
- Turning on demand generation activities as markets become available
- Expect to see steady growth throughout ResMed’s market and driving REPAPs
Competitor Recall and ResMed’s Response
- ResMed has scenarios and plans in place for all possible outcomes of the competitor recall
- Confident in ResMed’s ability to take care of unmet patient need regardless of competitor return date
- Expect good GM contribution, great patient care, and high attach rates for ResMed’s masks
Card-to-Cloud Inventory Upgrade
- As Card-to-Cloud devices reach warranty or payer allotted time, patients will have the opportunity to upgrade to AirSense 11 device
- ResMed had non-connected and Card-to-Cloud pager-type technologies in the past, but AirSense 11 provides optimal patient engagement and adherence
No bad stock 