ResMed (NYSE: RMD, ASX: RMD) reported Street-beating Q2 results as it boosted production to meet the demand created by Philips’ massive respiratory device recall.
The San Diego–based maker of CPAPs and other respiratory devices earned $224.9 million, or $1.53 per share, off nearly $1.034 billion in revenue for the quarter that ended Dec. 31, 2022. The results — posted yesterday evening — represented a bottom-line gain of 11% and a top-line gain of 16%.
Adjusted to exclude one-time items, ResMed earned $1.66 per share. The results came in 4¢ ahead of The Street, where analysts expected adjusted EPS of $1.62 off $1 billion in revenue.
ResMed CEO Mick Farrell said earlier this month that the opening of a massive new plant in Singapore brought ResMed closer to catching up with skyrocketing CPAP demand.
ResMed is seeking to meet skyrocketing demand amid competitor Philips’ recall
Medtech giant Philips has been out of the market for more than 18 months as it grapples with a recall involving 5.5 million CPAP and BiPAP ventilators and other respiratory devices. (Here’s a full timeline of the Philips recall.)
It’s hard to say when Philips will reenter the market. “It’s unclear how much longer Philips will be out of the flow generator market; we think that it could reenter the market as soon as 1H23, or its FDA consent decree could keep it out of the market for several more years,” Needham & Co. analyst Mike Matson said in a note.
ResMed has faced supply chain challenges as it has sought to meet the huge demand created by its competitor’s recall. But Farrell told analysts yesterday evening: “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.”
Farrell went on: “We are confident in our ability to fulfill all customer demand before the end of calendar year 2023, and we expect to see steady ongoing incremental device revenue growth in the third and fourth quarters of our fiscal year 2023.”
Investors reacted by sending RMD shares down more than 2% to $225.47 apiece by midday trading today. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was up more than 10%.
ResMed’s Farrell is becoming board chair
Also yesterday, ResMed announced that Mick Farrell will take over for his father, Peter Farrell, as chair of the company’s board of directors.
“I am honored to expand my role with ResMed as its next chair and to succeed my dad, Peter Farrell, whose vision, leadership, and guidance have helped ResMed become the largest outside-hospital, digital health company in the world,” Mick Farrell said.
This story originally ran on Jan. 26, 2023. Updated Jan. 27 with analyst comment and next-day stock price.