Philips was knocked out of the respiratory sleep devices market last year when it announced a serious recall involving millions of bi-level positive airway pressure (BPAP), continuous positive airway pressure (CPAP) and mechanical ventilator devices. At the time, the consensus on Wall Street was that the Amsterdam-based company would be out of the market for at least a year and, in a report today, Needham analysts Mike Matson, Joseph Conway and David Saxon confirmed that the company is effectively out for at least the rest of 2022.
With Philips out of the way, ResMed captured between $45 million and $55 million in revenue from Philips in its most recent quarter — and expects to pick up between $300 million and $350 million for its fiscal year 2022 that ends after June. The analysts said that ResMed could capture even more share in the first half of 2023, although that depends on the supply chain issues that San Diego-based ResMed has faced in trying to match the increased demand following Philips’ recall.
The analysts expect Philips to rejoin the market in calendar year 2023, as the company began a repair and replacement program for recalled devices in September 2021. Meanwhile, they say that ResMed’s revenue growth may peak in fiscal 2022 and slow down in 2023, followed by an even bigger halt in 2024.
“We think ResMed’s revenue growth will be limited by supply chain constraints that are challenging to forecast and its gross margin will be pressured by increased costs,” the analysts wrote in their thesis. “And while ResMed is gaining market share now, we expect a headwind when Philips re-enters the device market in 2023 and re-captures some portion of the market share it lost during the recall.”