ResMed (NYSE: RMD, ASX: RMD) reported first-quarter results that beat The Street on revenue but missed by a penny on earnings per share.
CEO Mick Farrell yesterday evening expressed confidence that ResMed’s suppliers will enable the maker of sleep therapy tech such as CPAPs to steadily increase production through the fiscal year. Farrell got to personally meet with many critical suppliers during a company event in Sydney earlier this year, impressing on them the important role that ResMed plays in improving lives.
In addition to the extra supplier outreach, ResMed responded to the global semiconductor supply shortage by launching card-to-cloud (C2C) versions of its AirSense 10 and AirCurve 10 products. The C2C products do not incorporate a communications model. Meanwhile, ResMed continued to launch its AirSense 11, which includes new features such as a touch screen, algorithms for patients new to therapy, and digital enhancements and over-the-air update capabilities.
“During the quarter, we saw strong customer uptake of our reengineered AirSense 10 Card-to-Cloud device. We also continued to increase our access to semiconductor communications chips, allowing us to produce more of our industry-leading, 100%-connectable platforms,” Farrell said.
ResMed continues to grab market share amid Philips recall
ResMed has a major opportunity to grab market share as competitor Philips continues to grapple with a major recall involving millions of respiratory devices. The recall has effectively removed Philips from the market for now. Farrell told analysts that he was skeptical Philips will resume selling in January.
“We know that there is that gap to fill, which is extra demand,” Farrell said.
Mike Matson at Needham & Co. agreed that Philips could stay out of the respiratory devices market longer than early 2023 — a plus for ResMed since it already captured roughly $240 million in market share from the recall in the previous fiscal year. Still, Mason said: “We maintain our Hold rating since RMD’s revenue and EPS growth has slowed as its laps the recall, and we expect a further slowdown when Philips reenters the market.”
Investors reacted by sending RMD shares down more than 7% to $215.28 apiece in morning trading today. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was down more than 2%.
ResMed CEO is positive about what’s next.
San Diego–based ResMed earned $210.5 million, or $1.43 per share, off $950.3 million in sales for the quarter ended Sept. 30, 2022. ResMed boosted its bottom line by more than 3% and its top line by more than 5% compared with Q1 2021.
Adjusted to exclude one-time items, EPS were $1.51 — a penny behind Wall Street expectations, where analysts predicted EPS of $1.52 and $944.62 million in revenue.
Farrell is confident that ResMed will reach its goal of improving 250 million lives through better healthcare in 2025. Plus, he sees a significant opportunity rising out of ResMed’s planned $1 billion acquisition of out-of-hospital software developer Medifox Dan.
Farrell told analysts: “We are transforming out-of-hospital care at scale.”
This story originally ran on Oct. 27, 2022. Updated Oct. 28 with stock price and analyst comment.
