Q2 2024 Earnings Summary
- Patients prescribed GLP-1 medications have a 10% higher propensity to start positive airway pressure therapy and show increased adherence rates, suggesting that the growth of GLP-1 use could boost demand for ResMed's products.
- ResMed is expanding the availability of its AirSense 11 platform across over 140 countries, driving strong device sales growth of 11% globally and positioning the company for continued revenue increases as adoption spreads.
- Despite competitors like Philips re-entering the market, ResMed continues to maintain market leadership by leveraging its superior technology and has a track record of winning and taking market share, even as competition intensifies.
- Potential market share loss due to Philips re-entering the market:
- Gross margin pressures from increased freight costs due to global conflicts:
- Slower than expected transition to AirSense 11 platform due to regulatory complexities:
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Impact of GLP-1s on Future Growth
Q: Will GLP-1s affect CPAP market growth?
A: Michael Farrell believes GLP-1s will lead to greater growth of patients entering the treatment pool over time. Data shows a 10% higher propensity for patients on GLP-1s to start PAP therapy. ResMed aims to leverage this trend, although the impact won't be immediate. -
Surmount OSA Study Implications
Q: How will Eli Lilly's Surmount OSA study affect ResMed?
A: The study may show 10–30% weight loss leading to significant AHI reductions. Farrell expects that combination therapy of GLP-1s and CPAP will remain necessary, as weight loss alone may not fully treat sleep apnea. ResMed anticipates positive effects from increased attention to sleep health. -
Competition from Philips Resuming Shipments
Q: Is Philips regaining share in OUS markets?
A: Philips has resumed competition in tens of countries in Europe and Asia. However, ResMed continues to win and take share, focusing on growing the market with superior technology. Farrell looks forward to healthy competition as Philips returns. -
Gross Margins and Shipping Costs
Q: Are price increases and shipping disruptions affecting margins?
A: Some price increases are progressive due to contractual arrangements, impacting margins over the back half of fiscal '24. Shipping disruptions, particularly through the Red Sea, are causing increased lead times and higher freight rates, potentially leading to headwinds in Q4. -
Restructuring Charges and Recall Costs
Q: Will there be further restructuring or recall costs?
A: The material restructuring is behind us. The cost related to the mask with magnets recall was fully accounted for this quarter , and no further costs are expected. -
Transition to AirSense 11 Platform
Q: When will AirSense 11 fully replace AirSense 10?
A: ResMed is working to obtain regulatory approval in all 140 countries. AirSense 11 has launched in top countries and recently in Japan. The AirSense 10 platform remains available and unconstrained until the transition is complete. -
Mask Sales Performance
Q: Why were mask sales weaker in some regions?
A: Global mask sales grew 9%, with 4% growth in Europe, Asia, and Rest of World this quarter compared to 14% last year. The variation is due to timing of contracts moving from December to January, and overall, ResMed is holding share. -
Impact of Mask Magnet Recall
Q: Did the magnet recall affect mask sales?
A: The 10% growth in U.S., Canada, and Latin America masks indicates strong performance. The magnet field safety notice had no impact on quarterly sales. No product was removed; plastic clips are available as an option for those who need them. -
Compliance Coach and 2030 Strategy
Q: How does Compliance Coach fit into 2030 goals?
A: Compliance Coach is an AI tool aiming to lower cost to serve and improve patient adherence. Success is measured by adherence rates at day 90, day 365, and beyond. It's part of ResMed's product-led, customer-centric, brand-enhanced strategy.