ResMed could benefit if tariffs are imposed on China and Mexico, but doesn’t need the boost, boss says

ResMed’s competitors might be hamstrung by potential tariffs imposed by the US, boss Mick Farrell says, but adds the company, which delivered a strong quarterly, doesn’t need the help.

ResMed develops sleep health hardware and software.

ResMed boss Mick Farrell says the new Trump administration could be a tailwind for the company, likely locking in a supportive taxation environment while potentially imposing tariffs which would disproportionately hit its competitors.

Mr Farrell said, speaking both as chief executive of ResMed and as chair of industry lobby group AdvaMed, he would prefer that medical devices be carved out of any tariff regimes should they be implemented.

But with ResMed manufacturing its sleep health devices in jurisdictions such as Sydney, Singapore and the US itself, the risk to the company from US President Donald Trump’s promise to impose high tariffs on countries such as China was not a concern.

And on the tax front, the likelihood that changes the President made in his 2017 Tax Cuts and Jobs Act, which set a flat corporate tax rate of 21 per cent, would remain in place - with some of the changes due to expire this year - was a positive.

ResMed chief executive officer Mick Farrell.

ResMed on Friday reported a strong set of quarterly numbers, with revenue up 10 per cent to $US1.3bn and net income up 65 per cent to $US344.6m.

Mr Farrell said the company had several trends in its favour at the moment, with Apple and Samsung wearable devices now increasingly able to identify sleep issues, and the rising use of GLP-1 drugs such as Ozempic driving more people to engage with the health system and subsequently look to address their sleep health needs.

“Our ecosystem is unmatched and ResMed is well-positioned to capitalise on the once-in-a-generation opportunities we have with the recent introduction and adoption of consumer wearables that track sleep health, as well as use of GLP-1 therapies,’’ Mr Farrell said.

“We believe these developments will drive increased patient flow as we continue to educate people on the benefits of healthy sleep and breathing, with care delivered right in their own home.”

Mr Farrell said the company’s future growth would build on its strong research and development base, with the launch of the fabric mask AirTouch N30i, a world-class innovation.

He also said the company had a solid base in machine learning and artificial intelligence, bolstered by billions of nights worth of sleep data.

“We’ve launched a generative AI product into the market called Dawn,’’ he said.

“I love what ResMed’s doing on the forefront of consumer tech and med-tech, but I also love what we’re doing on the forefront of digital health and digital medicine.

“So watch this space on gen-AI, what we can do with almost 21 billion nights of respiratory medical data in the cloud.

“The future’s exciting in digital health and med-tech.’’

Mr Farrell said on the tariff front, ResMed would not be adversely affected should tariffs be imposed, but there were competitors which manufactured in Mexico and China which might be disadvantaged should the flagged tariffs be implemented.

“I would advocate for a med-tech carve out, but if they don’t happen and there are blanket tariffs that won’t affect ResMed, because we manufacture in Sydney, in Singapore or Atlanta,’’ he said.

“One of our competitors selling in the US does manufacture in China and ships to Florida and rebadges it, so that competitor might face some headwinds which would potentially be a tailwind for ResMed.

“We don’t need that because I think ResMed is beating that competitor very well on a level playing field.

“On the tax front .... we expect that the Trump administration and with a Republican Congress, they have the advantage of potentially pushing through an extension of the 2017 tax cuts.

“We at AdvaMed are supportive of that. We at ResMed are supportive of that because it means we have a tax rate that doesn’t go above Europe which it had done for a while, and keeps the US tax rate competitive.’’

Mr Farrell said the company had strong free cash flow and “have a radar screen out there” for earnings-accretive acquisitions in the $US100-$US500m range, however there was nothing to announce on that front.

Wilsons Advisory analyst Dr Shane Storey said ResMed’s result was in line with consensus estimates on revenue but beat earnings before interest and tax and earnings per share estimates by 3 per cent and 5 per cent respectively.

Dr Storey said Wilsons expected ResMed would move into a net cash position in the second half of the financial year despite an ongoing share buyback being in place.

RBC Capital markets called it a “solid result”.

“Overall we expect the revenue and earnings beats to be well taken by the market.

ResMed will pay a US53c dividend on March 20.

ResMed shares are trading near 12-month highs, down 1.1 per cent to $40.06 on Friday, but well above a low hit in February last year of $26.64.

Originally published as ResMed could benefit if tariffs are imposed on China and Mexico, but doesn’t need the boost, boss says