Mick Farrell is ResMed's CEO. During Q1, the company introduced the AirSense 11 in the U.S.

Mick Farrell is ResMed's CEO. During Q1, the company introduced the AirSense 11 in the U.S.

San Diego-based ResMed (NASDAQ: RMD) posted strong quarterly results last week, beating analysts’ estimates even as ongoing supply chain bottlenecks slowed delivery and sales of the company’s marketing-leading sleep apnea machines and ventilators used to treat COVID patients.

ResMed reported Q1 earnings of $1.51 per share, handily beating the consensus estimate of $1.35 per share.


The company earned $1.27 per share during the same quarter last year.


The company has now put up four straight quarterly beats, propelling RMD shares more than 35% higher over the past year.


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Mick Farrell CEO ResMed

“Our first-quarter results demonstrate strong performance across our business with double-digit growth in both top-line and bottom-line metrics,” said Mick Farrell, ResMed CEO.


Farrell attributed the company’s strong Q1 to “ongoing high demand” for ResMed’s sleep and respiratory care products as well as steady growth across its software-as-a-service (SaaS) business.


The impressive quarterly report comes as ResMed, like most other major medical equipment manufacturers, battles ongoing supply chain bottlenecks and a worldwide semiconductor chip shortage.


“Today, we are selling the #1 and #2 PAP devices in the market,” Farrell said. “It is fair to say we could perform quite strongly with both solutions if not for the current (supply chain) component constraints we’re navigating through.”


Farrell said some of the company’s suppliers have told him the chip and electronic component shortages could extend another “12 or even 18 months” through the end of 2022.


Highest-Need Patients


ResMed’s market-leading PAP (positive airway pressure) devices for treatment of sleep apnea currently account for about 80% of the company’s revenues.


“Our competitor that is in the #2 market share position announced a recall mid-June that has created unprecedented dislocations in the (PAP) market,” Farrell also said last week. “In effect, we are facing the challenge of providing the volume for our own #1 market-share position and their #2 market-share position, across the world.”


And as the current chip shortage continues to restrict ResMed’s “access to critical electronic components,” Farrell said the company has been “forced” to allocate products and ensure priority to “highest-acuity and highest-need patients first.”


Still, even amid the supply chain headwinds, ResMed posted $904 million in revenues for Q1, up 19% from the year-ago period. Income from operations increased 21% while non-GAAP operating profit was up 18%.


After the release of earnings, ResMed’s board of directors declared a quarterly cash dividend of $0.42 per share, with a record date of November 11, 2021 and distribution date of December 16, 2021.


RMD is currently trading around $265 a share, about 20% off its 52-week high of $301. Analysts have a consensus “hold” rating on the stock and a price target of $285.


Global Operations


Farrell said Q1 revenue in the U.S., Canada and Latin America -- excluding SaaS -- grew by 22%, due, primarily, to ongoing demand for the company’s products and “recovery of core sleep patient flow that was previously impacted by COVID-19.”


Revenue in Europe, Asia and other non-North American markets grew by 21%, the CEO added.
ResMed has manufacturing facilities in Singapore, Sydney, Australia and Atlanta and offices in nearly a dozen countries around the world.


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Jayme Rubenstein Director of Global Media Relations ResMed

Jayme Rubenstein, global public relations and media director at ResMed, said in addition to the semiconductor and electronic component shortages, the company’s “freight options continue to be sparse and more expensive since the pandemic began.”


Nonetheless, Rubenstein said ResMed’s steady growth continues to drive additional talent recruitment. “Yes, we are definitely hiring,” he said, noting the company’s website currently lists 343 job openings across the company globally.


New Product Introduced in Q1


During Q1, ResMed’s SaaS revenue increased a solid 6%, “due to continued growth in resupply service offerings and stabilizing patient flow in out-of-hospital care settings,” Farrell said.


In the first quarter, the company also introduced its next-generation CPAP device, AirSense 11, in the U.S., and announced the promotion of Bobby Ghoshal to president of the SaaS division.


“Despite constantly evolving market dynamics, we continue to pivot to meet the needs of our stakeholders,” Farrell said. “Driving sustainable long-term growth and ensuring that we are investing strongly in medical device research and development as well as digital health innovation that will unlock value for all of our customers” continues to be the company’s top priority, the CEO added.


“I’m incredibly proud of our global teams that are working with providers and physicians in the most unusual times across 140 countries to get products directly into the hands of patients who need our solutions most,” Farrell said.


ResMed
Founded: 1989
CEO: Mick Farrell
Employees: 8,000+ globally (500+ in San Diego)
Revenue: $3.2 billion (FY ‘21)
Headquarters: Kearny Mesa
Website: 
www.resmed.com
Notable: The company’s myAir app allows patients to track sleep therapy progress via feedback and support on mobile devices.
Contact: (800) 424-0737