ResMed, a respiratory care and software-as-a-service provider, posted quarterly revenue that beat analyst estimates as patient demand for its sleep and respiratory care devices outpaced supply amid competitor Philips’ absence from the market.
San Diego-based ResMed has taken advantage of Philips’ ongoing recall of sleep apnea devices and respirators to grow market share, even as supply chain challenges have limited its ability to fully do so. Now, those constraints are starting to lift, ResMed CEO Mick Farrell said on a earnings call Thursday.
“We see the supply environment improving every week, every month, and every quarter, and our access to the specific electronic components we need has increased. We are confident in our ability to fulfill all customer demand before the end of calendar year 2023,” Farrell said.
Mick Farrell was appointed chairman of ResMed this week, succeeding his father, Peter Farrell, who will become chair emeritus and will remain an active board member, the company said in a separate statement. Mick Farrell became ResMed’s CEO on March 1, 2013, and has served as a member of the company’s board of directors since assuming that role.
Mick Farrell predicted revenue growth from device sales will increase steadily in the company’s third and fourth fiscal quarters.
William Blair analyst Margaret Kaczor said in a note to clients that ResMed’s second-quarter revenue was 5% above her target, and she expects growth to remain at double-digit levels at least through fiscal 2024.
“In the United States, the AirSense 10 card-to-cloud alternative solution continues to be well received and the company has now removed device allocations, allowing its customers to purchase all needed supply,” Kaczor wrote.
The card-to-cloud device, designed without wireless capabilities to bypass a supply chain crunch, will be phased out over the next few quarters, allowing the company to refocus on its strategy of 100% cloud-connected devices, Farrell said.
MediFox acquisition completed
In the quarter, ResMed closed on its $1 billion acquisition of German software company MediFox Dan, intended to help the company extend its software-as-a-service business to nursing homes and home health customers outside the U.S. The company is now working to integrate and grow the business in Germany and beyond, Farrell said.
ResMed’s SaaS business for outside-the-hospital care increased 18% year over year in the second quarter.
“Our SaaS business is an important part of ResMed's future growth,” Farrell said.
Propeller enters EHR systems
The integration of ResMed’s Propeller monitoring system with the two leading U.S. electronic health record systems, Epic and Cerner, should aid adoption of the digital therapeutic platform for patients with chronic obstructive pulmonary disease, the company said. ResMed acquired the technology through its 2019 purchase of Propeller Health.
“It's still early days for this technology. However, combined with our investments in home-based high flow therapy for treatment of COPD in the home, we see this technology combination as an important clinical addition for treating lung disease and an integral part of our 2025 growth strategy,” Farrell said.