ResMed touts product ‘revolution’ to drive next growth phase

A revolutionary new product and strong tailwinds from wearables are providing momentum for the already surging ResMed, the company’s boss says.

ResMed is launching a new sleep apnoea mask design in coming days.

ResMed is riding the wave of a data and healthcare revolution, while also launching its own “revolutionary” new product, chief executive Mick Farrell says, after handing down a strong set of quarterly results.

ResMed shares are trading at levels not seen since mid-2021, adding 7.4 per cent on Friday after reporting a quarterly operating profit of $US387.3m, up 34 per cent.

Revenue was 11 per cent higher at $US1.22bn for the quarter, while the company’s gross margin jumped 8 per cent to 58.6 per cent.

Mr Farrell told The Australian on Friday that the margin improvement was “extraordinary’’, and was a testament to the performance across the sleep health product company’s finance, operations and commercial teams.

“We’re trying to balance inventory, but what we’re really doing is just keeping our laser focus on the patient, making sure that they find a seamless path through screening, diagnosis, treatment and management,’’ he said.

“And as the global leader, we executed incredibly well in the quarter. I’m really proud. “Double digit growth in every product, every geography, software, hardware, across the board.’’

ResMed is benefiting from the increased use of GLP-1 weight loss drugs globally, in a major contrast to sentiment when the drugs such as Ozempic and Wegovy were first brought to market.

Mr Farrell has told The Australian in previous interviews that the fact that the availability of the drugs inspires more people to engage with their healthcare providers actually brings more patients into the ResMed funnel.

There were fears among analysts that a reduction in obesity and overweight levels across the community might pare back ResMed’s addressable market, however it appears the increased enagagement with healhtcare providers is more than balancing out this impact

The company is also benefiting from increasingly sophisticated sleep tracking across wearable devices such as Apple smartwatches, which again are increasing patient knowledge of their sleep health.

Mr Farrell said on Friday, speaking from the US, that in recent months Samsung received US Federal Drug Administration clearance for the sleep apnoea functionality on its Galaxy smartwatch, and the most recent two versions of the Apple device have a software upgrade with possible sleep apnoea detection.

“ResMed is going to be there as what we call a ‘sleep health concierge’ to help the person find their path from sleep health, breathing, health concerns to treatment, screening, diagnosis, treatment and management for life and so I think it’s a big tailwind, I think it’s a once in a generation opportunity,’’ Mr Farrell said.

“That’s a marathon too, it’s a steady build over the next one, three, five quarters, the next one, three, five years.’’

ResMed is also in coming days launching its AirTouch N30i sleep apnoea mask, which is the company’s first fully fabric mask for use by sleep apnoea patients.

Mr Farrell said it was a “revolution” in mask design, with the company working for the past decade or so on how it could design a more comfortable mask and move away from products such as plastic and rubber.

“We make the smallest, quietest, most comfortable, most connected and most intelligent products, but if you talk to a patient and you ask, ‘Hey, can I get better?’ The answer is yes.

“And so we want to make it just part of your lifestyle, part of your routine - clean my teeth, say my prayers, put on my CPAP, and the more it’s closer to just like pulling a sheet over your head or putting your head on a cotton pillow, this can be the same thing.

“We’re hyped up. It’s launching next week. The moment of truth comes when that prescription is written, that therapist recommends it, and the patient chooses to buy, and if they do that, do they keep buying it?’’

Mr Farrell said ResMed launched its 2030 strategy three weeks ago, which identified that the company had a “clear market-leading value proposition’’ and an “incredible market opportunity’’.

“ResMed has a sustainable competitive advantage through its digital health ecosystem leadership and its strong, deep, talented management team and great culture,’’ Mr Farrell said.

ResMed will pay a US5.3c dividend on December 12, up from US4.8c for the same quarter last year.