ResMed
(NYSE: RMD)
announced that it is reducing its workforce by about 5% as part of a restructuring it plans to complete in the present quarter.
The San Diego–based maker of CPAPs and other respiratory devices listed a headcount of 8,160 in its most recent annual report, which means roughly 400 workers could be affected.
“Decisions like this that impact people are never easy. However, we know that we are doing the right thing, and we’re doing the right thing to accelerate our growth and to refocus on our long-term mission,” CEO Mick Farrell said during the company’s earnings call yesterday evening.
ResMed has seen its revenue spike amid the massive recall at competitor Philips, but the growth may be slowing. Revenue was up 16% year-over-year to $1.1 billion in the first quarter that ended Sept. 30, 2023. It was up 23% in the previous quarter.
“We have stopped some projects that were not working out as well as we thought. We’ve increased investment in areas that we believe will be pivotal to long-term success, such as our digital health tech investments as well as focused hardware and software development,” Farrell said.
Mike Matson, senior research analyst at Needham & Co., said it was possible that the restructuring might make investors more wary, especially with questions about how the popularity of a new class of weight loss drugs might affect the medical device industry. “Investors may interpret it as a negative sign given the heightened concerns about the impact of GLP-1s. However, RMD indicated that it is tracking thousands of patients on GLP-1s and using CPAPs, and so far the data shows no change in adherence or resupply rates.”
The next morning, RMD shares were down more than 1% to $137.29 apiece. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was up slightly.
ResMed is focusing more on digital health offerings and AI
ResMed posted profits of $219.4 million in the first quarter. That amounts to $1.49 per share on sales of $1.1 billion.
The company’s profits increased 4% compared to the prior-year quarter, while sales grew 16%.
Adjusted to exclude one-time items, earnings per share were $1.64. Wall Street analysts were expecting adjusted EPS of $1.62 on sales of $1.1 billion.
“ResMed has started Fiscal Year 2024 with strong revenue growth driven by ongoing patient flow and solid demand across our global sleep and respiratory care markets, alongside increasing adoption of our outside hospital software solutions,” Farrell said in a news release. “Our ability to meet global demand with technologies, including our best-in-class AirSense 11 platform, has positioned us well to continue growing across global markets, with particularly strong growth this quarter in Europe, Asia, and beyond.”
He said ResMed has started launching AI-driven software products in its digital health ecosystem, “which I believe will create a new class of offerings that will allow us to continue to drive long-term, profitable growth.”
“New patient starts on our physician and provider-facing platform, called AirView, and our patient-facing app, called myAir, show very strong patient flow,” he continued. “With these increasing rates of patients activated into the healthcare funnel, I am more confident than ever in our growth strategy and our ability to achieve our goal of improving 250 million lives in 2025.”
Managing Editor Jim Hammerand contributed to this report, which originally ran on Oct. 26, 2023. Updated Oct. 27 with news of layoffs and other updates.
