[News] RESMED CHANGES COMING?

[srlevine1]

FYI: 

ResMed’s 2024 fiscal year kicks off with plans to lay off 5% of workers

As it continues to take advantage of the gaping hole left in the CPAP machine market by competitor Philips’ ongoing respiratory recall troubles, ResMed is still fine-tuning its long-term growth strategy—a process that’s now resulting in some short-term shrinkage.

During a call with investors on Thursday afternoon to discuss ResMed’s financial results for the first quarter of its 2024 fiscal year, CEO Mick Farrell said the actions that the company is taking to “accelerate profitable growth across ResMed and to power our long-term success” have led to a 5% reduction in its global workforce.

“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, creating the smallest, the quietest, the most comfortable, the most connected and the most intelligent healthcare solutions in the market,” Farrell said.

“These changes have impacted some of our teams,” he continued. “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. I feel more strongly than ever that we are well positioned with an incredibly long runway of profitable growth and value creation for all of our stakeholders as we move forward.”

ResMed CEO on Philips' return to CPAP market: 'Game on'

Farrell didn’t disclose the exact number of employees affected by the workforce reduction, which began earlier this week. However, as of ResMed’s most recent annual report, the company counted more than 10,140 employees, meaning the layoffs could impact at least 500 workers.

Brett Sandercock, the devicemaker’s CFO, said on Thursday’s call that the restructuring is on track to be completed during the second quarter of ResMed’s fiscal 2024.

When asked later whether additional restructuring could be in ResMed’s future, Farrell suggested that this week’s actions represent the biggest chunk of changes for now.

“There are some changes I’m looking at in the operating model, in roles and responsibilities, and a focus on a more product-led and brand-led company that will come over time, but they’re not massive restructures,” he said. “That restructure is done, and we’re now focused on moving forward.”

ResMed stock slides to near 2-year low despite 18% annual revenue rise

The layoff announcement came as ResMed reported a quarter of strong growth. For the first quarter of its fiscal 2024, which began July 1, the company took in revenues of more than $1.1 billion, up 16% year over year, per Thursday’s earnings report.

Its net profits rose, too, despite taking hits from incremental expenses tied to the recent acquisition of German software developer Medifox Dan, from increased component and manufacturing costs and from an $8 million provision it took to prepare for the costs of a recently launched corrective action for some of its Astral ventilators. Its quarterly net income weighed in at more than $219 million, up 4% from the $210.5 million profit it recorded a year prior.

Still, thanks to those expenses, the company’s gross margin shrank by 250 basis points—down to 54.4% from nearly 57% a year ago. That led its stock price to continue its steady dip downward: After slipping below the $200 mark for the first time in a year upon the release of its full-year 2023 results in August, the stock has since fallen even further below that threshold, spending much of the last two months below $150 and briefly dipping in after-hours trading Thursday to a three-year low of $124.

[Columbiabill]

It's hard to hear about people getting laid off when a corporation is profitable.  I've always believed that if a company makes layoffs, a.k.a restructures,  the CEO and their direct staff should lose their bonus and stock incentives.  This is coming from someone who works for a fortune 100 company.  
That said I saw a video on YouTube from CPAPReviews that there is a new ResMed mask and possibly travel machine coming in 2024.  
I think that the F&P solo with their self adjusting head gear is going to be hard to beat.

[PeaceLoveAndPizza]

This is one of the dangers of unexpected demand when a competitor falters. The sudden shift shows where the gaps are in a companies execution strategy. They began making executive management changes last summer and it continues as they change their operating model to deal with the cost of goods increases they have to manage. They seem like a smart bunch and market pundits still recommend them as a “BUY”, which is a good sign.

If you are interested in reading more, the following link gives the transcript of their Q1 2024 earnings call.

https://finance.yahoo.com/news/resmed-in...22195.html

[Sleeprider]

I remember in early 2022 when Philips decided their priority should be capitalization of data collected by their devices to improve corporate profits and also help improve delivery of service by health providers and suppliers (DME). At the same time they encrypted the data collected by their Dreamstation devices. You may recall this ALERT thread https://www.apneaboard.com/forums/Thread...ge-ACT-NOW All of this was on the cusp of their device recall as it was moving from a voluntary correction to a full-fledged corporate disaster that rocked the industry worldwide.

In Resmed's current Earnings Call we see Resmed's vision on the use of data is quite different:

Insider Monkey Transcripts
October 27, 2023·25 min read
In this article:

RMD
-0.57%

ResMed Inc. (NYSE:RMD) Q1 2024 Earnings Call Transcript October 26, 2023

ResMed Inc. beats earnings expectations. Reported EPS is $1.64, expectations were $1.62.

Operator: Hello, and welcome to the ResMed First Quarter Fiscal Year 2024 Earnings Conference Call and Webcast [Operator Instructions]. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Amy Wakeham, Chief Communications and Investor Relations Officer. Please go ahead, Amy.

Amy Wakeham: Great. Thank you, Kevin. Hi, everyone. Good morning and good afternoon. Welcome to ResMed's First Quarter Earnings Call for Fiscal Year 2024. We are live webcasting this call and the replay will be available on the Investor Relations section of our corporate Web site later today along with a copy of the earnings press release and presentation, both of which are available now. On the call today are Chief Executive Officer, Mick Farrell; and Chief Financial Officer, Brett Sandercock. Following our prepared remarks, Mick and Brett will be joined by Rob Douglas, President and Chief Operating Officer, to answer any questions you may have. During today's call, we will discuss several non-GAAP measures. We encourage you to review the supporting schedules in today's earnings press release for a reconciliation of the non-GAAP measures to the GAAP reported numbers.

A close-up view of medical devices, electrical stimulation electrodes, and batteries.

In addition, our discussion today will include forward-looking statements, including, but not limited to, expectations about our future financial and operating performance. We make these statements based on reasonable assumptions. However, our actual results could differ. Please refer to our SEC filings for a complete discussion of the risk factors that could cause our actual results to differ materially from any forward-looking statements made today. I'd like to now turn the call over to Mick.

Mick Farrell: Thanks, Amy, and thank you to all of our shareholders for joining us today. Our first quarter fiscal year 2024 results reflect strong growth across our entire business with double digit top line growth. This growth was driven by double digit global growth in the masks category and double digit growth in our software as a service business. We also achieved high single digit global growth in devices even as that category annualizes very high growth in the prior year period. The flexible and agile work of our supply chain, manufacturing and distribution teams has enabled us to provide ongoing global availability of our market leading 100% cloud connectable flow generator platforms. We have unconstrained supply of our AirSense platforms enabled by excellent volumes of the AirSense 10 platform globally and fast ramping approvals, launches and delivery of the best-in-class AirSense 11 platform country by country.

During the quarter, we accelerated delivery of the AirSense 11 in Japan, and we launched the AirSense 11 in Australia and New Zealand. We have plenty of runway ahead on our pathway to launch in all of the 140 countries where we sell our solutions. We are very proud to be able to support all global demand for flow generators through a combination of AirSense 10 and AirSense 11 platforms. We remain laser focused on accelerating the production and delivery of the AirSense 11 platform. We are moving swiftly on that front. Our Masks and Accessories business grew 21% year-over-year, amongst a highly competitive market with all global players on the field in this category. Our commercial teams are doing an amazing job of showing the clinical and economic benefits of the ResMed mask portfolio.

Our clinical and commercial teams are also partnering with physicians and provider customers to drive resupply programs directly with patients. The peer reviewed and published clinical evidence showing that adoption of a resupply program leads to better patient outcomes is proving itself out in the real world customer by customer. We continue to see strong growth in the US mask business where provider resupply programs can scale, powered by our digital health ecosystem, including AirView for physicians and providers and myAir for patients. For patients around the world, especially in nonreimbursed markets, we are developing, launching and scaling outreach and subscription programs to help the consumer who is the ultimate customer to take control of their own health and engage directly in refreshing their mask, tubing, humidifier and other accessories.

This has been a permanent uptick since COVID-19. People care about respiratory health and respiratory hygiene and they are taking action, and we are supporting them with digital solutions and services to meet their needs. Before I turn to review updates on our key strategic priorities, I'd like to spend a little time discussing actions we've taken to accelerate profitable growth across ResMed and to power our long term success. We've taken immediate steps to ensure we're prioritizing the right things to drive profitable growth and our leadership teams have carefully reviewed opportunities to improve our performance. 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.

Creating the smallest, the quietest, the most comfortable, the most connected and the most intelligent healthcare solutions in the market. These changes have impacted some of our teams. And this week, we have taken actions that resulted in a reduction of our global workforce by 5%. 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. I feel more strongly than ever that we are well positioned with an incredibly long runway of profitable growth and value creation for all of our stakeholders as we move forward. Let's now turn to a discussion of our three key strategic priorities: number one, to grow and differentiate our core Sleep Apnea and Respiratory Care business; number two, to design, develop and deliver market leading medical technology as well as digital health solutions that can be scaled globally; and number three, to create, innovate and grow the world's best software solutions for care delivered outside the hospital, a field that we call residential medicine.

There are over 2 billion people worldwide suffering from sleep apnea, chronic obstructive pulmonary disease, respiratory insufficiency due to neuromuscular disease and insomnia. There are millions more that we can support as they navigate the complex outside hospital healthcare system. We believe that healthcare should be delivered in the lowest cost, lowest acuity and highest comfort location possible. Very often, that is a patient's own home. We have a massive opportunity ahead of us to help hundreds of millions of people worldwide. Our end markets remain incredibly underpenetrated with many opportunities to add value, reduce friction, lower costs and improve patient outcomes. Now that we've been able to comfortably support overall global market demand for sleep devices for the last few quarters, we're ramping up our demand generation initiatives.

We're investing in marketing efforts to raise awareness and patient engagement across specific global markets. We are leveraging traditional healthcare channels as well as investing in cost effective direct-to-consumer demand gen campaigns to help what we call sleep concern consumers, find their way into the screening, diagnostic, treatment and management pathway. We will act as a digital concierge to guide patients on that journey. In terms of analyzing the results of these efforts to date and ongoing, we are tracking new patient starts in our physician and provider based ecosystem, AirView, which now has more than 22.5 million patients, as well as the new user starts in myAir where patients themselves choose to participate in their personalized healthcare journey to better breathing and better sleep.

I at least find that vision more reassuring, and more inclusive to the consumer sector. I would however like to see more emphasis and recognition of the role of patients in managing their own therapy, but at least it is there. I don't see the 5% force reduction as significant in scope or having much impact on the core business, and it's a common to see a minor realignment of workforce occur with consolation of focus in core business priorities. It looks like the rollout of the Airsense 11 and certainly the Aircurve 11 has been a lot slower than they wanted, and the Airsense/Aircurve 10 series is still a major part of the business. One aspect of Resmed's data utilization shows a continued over-emphasis on "compliance" rather than outcome:

This quarter, we started rolling out a digital product in our US market called Compliance Coach.

Compliance Coach is built for home care providers to help them efficiently focus efforts and prioritize outreach to increase patient compliance and ultimately to drive better patient outcomes by helping them meet and beat 90-day adherence goals. The application utilizes ResMed's many billions of nights of de-identified sleep and respiratory care data in the cloud to predict the likelihood that a patient will be adherent to therapy or not.

A part of Resmed's business I was unaware of:

In addition, we have investments in other second line therapies, including pharmaceuticals and hypoglossal nerve stem technology.

The report is worth reading, but is a bit long.

[SarcasticDave94]

If there's any value in how things like business models feel, ResMed feels like it's got a much better plan to succeed. I think it reflects on how they manage and even down to the products they sell. PR is basically the opposite IMO, feels more like get rich quick.

[paulag1955]

Do you really think so? I don't understand how anyone with hair too short for a ponytail can even keep that type of headgear in place.

[SarcasticDave94]

My olive drab boonie hat stays on just fine.