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ResMed Inc.
CEO : Mr. Michael J. Farrell BE, MBA, SM

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2023 Q4	22.7% YoY	7.8%	17.3%	2023-08-03

Mick Farrell says,

Strong Growth in Devices, Masks, and Software Businesses

• Double-digit growth in devices, masks, and software businesses
• Unconstrained availability of AirSense 10 flow generated devices
• Increasing supply of AirSense 11 platform throughout fiscal year 2024 and beyond

Significant Adoption of Patient-Facing Digital Health Platforms

• Strong adoption of myAir patient app, with double the adoption rate compared to AirSense 10 platform
• High engagement with myAir app linked to higher therapy adherence and better patient outcomes
• Acquisition of Somnoware to streamline end-to-end pathway for patients and improve customer experience

Growth in Respiratory Care Business

• Strong growth in non-invasive ventilators and life support ventilator solutions
• Focus on addressing COPD as a global health epidemic
• Development of home-based high-flow therapy for treating respiratory insufficiency in the home

High Growth in SaaS Business

• Year-over-year growth of 34% in SaaS business
• Strong organic growth in Brightree and MatrixCare portfolio
• Pent-up demand for technology investments in residential medicine verticals

Improvements in Margins and Bottom Line Profitability

• Improvements in business margins with geography mix and product mix
• Transition to AirSense 11 platform and increased software solutions growth
• Higher inventory costs and freight costs expected to work their way through the supply chain

Brett Sandercock says,

Revenue and Sales

• Q4 revenue was $1.12 billion, a 23% increase compared to the prior year quarter.
• Revenue growth was driven by strong demand for cloud connected sleep devices and solid growth across the product portfolio.
• Device sales globally increased by 24% in constant currency terms, while masks and other sales increased by 18%.
• In the U.S., Canada, and Latin America, device sales increased by 30%, benefiting from strong demand and the availability of cloud connected devices.
• In Europe, Asia, and other markets, device sales increased by 15% in constant currency terms, reflecting strong demand and improved availability of cloud connected devices.

Software-as-a-Service (SaaS) Revenue

• SaaS revenue increased by 34% in the June quarter, driven by the contribution from the MEDIFOX DAN acquisition and strong performance from the HME vertical.
• Excluding the MEDIFOX DAN acquisition, SaaS revenue grew by 8%.

Gross Margin

• Gross margin declined by 200 basis points to 55.8% in the June quarter.
• This decrease was primarily due to component cost increases, warranty and manufacturing related cost increases, and product mix shifts.
• Unfavorable foreign currency movements and a lower than expected product mix benefit also impacted gross margin.

Operating Expenses

• Sales, General, and Administrative (SG&A) expenses increased by 25% (26% in constant currency terms), mainly driven by increased employee-related costs, marketing expenses, travel expenses, and the incremental expenses associated with the MEDIFOX DAN acquisition.
• SG&A expenses as a percentage of revenue was 21.5% compared to 21.1% in the prior year period.
• R&D expenses increased by 21% (23% in constant currency terms), consistent with the prior year quarter.
• R&D expenses as a percentage of revenue was 7%.

Net Income and Diluted Earnings Per Share

• Net income for the June quarter increased by 7%, and non-GAAP diluted earnings per share also increased by 7%.
• Non-GAAP adjustments included acquisition expenses, restructuring costs, and a gain from a business interruption insurance claim.

Debt and Cash Flow

• At June 30, the company had $1.4 billion in gross debt and $1.2 billion in net debt, mainly due to the funding of the MEDIFOX DAN acquisition.
• Cash flow from operations for the quarter was $237 million.
• Capital expenditure for the quarter was $34 million, and depreciation and amortization totaled $47 million.
• The company ended the quarter with a cash balance of $228 million.
• During the quarter, debt was reduced by $145 million, and the company had approximately $745 million available for drawdown under its revolver facility.

Dividend and Growth Strategy

• The Board of Directors declared a quarterly dividend of $0.48 per share, representing a 9% increase over the previous dividend.
• The company plans to reinvest in growth through R&D and deploy capital for tuck-in acquisitions.
• The recent acquisition of Somnoware, a company providing an upstream diagnostic management platform, is aligned with the company’s growth strategy.

Q & A sessions,

Global Devices Sales

• $602 million in global devices sales in Q4 2023
• 30% growth in U.S., Canada, Latin America
• 15% growth in Europe, Asia, and rest of the world

Competitor Recall

• Uncertainty around the impact of a competitor recall
• No definitive date for the end of the recall
• Potential for ResMed to experience stronger growth and take additional market share

Regional Competition

• Competition with regional competitors in Europe, Asia, and Americas
• Continued success in beating competitors and maintaining/growing market share
• Launching AI-driven products to stay ahead in the digital space

Resupply and Sustainability

• Strong growth in resupply setups globally
• Sustainability of resupply growth driven by respiratory health trends and consumer demand
• ResMed’s market share driven by excellent mask products and patient outreach programs

Gross Margin Factors

• Foreign exchange impact on inventory, resulting in a 30 basis points decrease in gross margin
• Potential for gross margin improvement through geographic and product mix, software solutions, and lower inventory costs
• Potential for gross margin improvement with the launch of AirSense 11