Lyanne Harrison

Lyanne Harrison followed up on GLP-1s, asking if ResMed is observing any changes in compliance or therapy adherence among GLP-1 OSA patients in the three-year tracking cohort, particularly for those with mild or moderate sleep apnea.

Answer

CEO Mick Farrell stated that patients continue to adhere to CPAP therapy due to symptomatic relief, even if their AHI is somewhat reduced. He noted no reductions in adherence within this cohort and, in fact, observed that these patients are more motivated and adherent to therapy.

Leanne Harrison asked if the company is observing any changes in compliance or therapy for GLP-1 OSA patients in the three-year tracking cohort, particularly those with mild or moderate sleep apnea, given the expected increase in GLP-1 usage.

Answer

CEO Mick Farrell confirmed that patients on GLP-1s are more motivated and continue to purchase more at three years. He emphasized that the symptomatic relief from CPAP therapy keeps patients adherent for life, even if their AHI is reduced, and that the thesis of GLP-1s being a headwind has shifted to a tailwind.

Lyanne Harrison from Bank of America asked for a detailed breakdown of the factors contributing to the strong gross margin expansion in the quarter.

Answer

CFO Brett Sandercock attributed the 140 basis point year-over-year increase in gross margin to several meaningful factors. These included manufacturing and distribution efficiencies, improved factory recoveries, freight cost improvements, benefits from the ongoing AirSense 10 to AirSense 11 platform transition, lower component costs, and a favorable product mix with stronger mask growth relative to devices.

Lyanne Harrison from Bank of America asked if the strong device growth was influenced by any one-off bulk purchases or stocking by durable medical equipment (DME) providers ahead of potential tariffs.

Answer

Executive Michael Farrell confirmed there were no one-time stocking events in Q2, contrasting it with some stocking in Japan during Q1 following the AirSense 11 launch. He also stated that ResMed does not anticipate any direct impact from potential U.S. tariffs on Chinese or Mexican goods, noting that such tariffs could negatively affect competitors who manufacture in those regions.

Lyanne Harrison requested an update on AirSense 11 production, its allocation status, the sales mix versus AirSense 10 in the U.S., and the potential for a patient backlog.

Answer

CEO Michael Farrell confirmed that AirSense 11 production is "firing on all cylinders" and that the "vast, vast majority" of U.S. device sales are now AirSense 11. He acknowledged a potential backlog exists for patients awaiting the new device for their 5-year replacement, identifying this "recap" cycle as a significant opportunity.

Lyanne Harrison asked for several specific metrics, including the current length of the VAC approval process, VAC approval rates, and Q2 revenue from PermeaDerm. She also questioned the sales force's time allocation between products and the potential cost impact of upcoming clinical studies for the Dermal Matrix.

Answer

CEO James Corbett detailed that the VAC process takes 4-6 months, with no turndowns in Q2 and very few historically. He clarified that new product promotions are complementary, as the Dermal Matrix, RECELL, and PermeaDerm are used sequentially in the same procedure. He also stated that the new clinical study costs are not expected to cause a significant expense increase, as they will replace spending from completed studies. CFO David O'Toole added that PermeaDerm accounted for about 2% of Q2 revenue.