ResMed posts mixed results

Friday, April 24, 2015

SAN DIEGO – ResMed saw a 42% increase in flow generator sales, but a 4% decrease in mask sales for the third quarter ended March 31.

A market share grab by the recently launched AirSense 10 and AirCurve 10 platforms helped to increase flow generator sales, says CEO Mick Farrell.

“Clearly with a number like that—that we probably haven’t seen since 2006, 2007—you’re not just growing the market,” he said during a conference call to discuss earnings. “You’re clearly taking some share.”

Farrell acknowledges that increases that large aren’t lasting, but going forward he believes there’s potential for “solid, mid-single digit increases” in flow generator sales due to market growth and an increased focus on technology that improves efficiencies and outcomes.

As for masks, Farrell says ResMed expects to “get back to positive growth,” especially as the price declines that were implemented a year ago continue to work their way through the system.

“The mask category continues to be competitive, but stable,” he said. “We’ll be annualizing those price declines. We’re over the halfway point, but there is still some time—customer by customer, region by region—for those to annualize.”

In addition to weak mask sales, ResMed’s gross margins for the third quarter, lower than expected at 59.5%, raised some eyebrows. The company expects the same gross margins in the fourth quarter.

“At the moment, we’re dealing with quite a few headwinds,” said Brett Sandercock, CFO, of declines in average selling prices, unfavorable product and geographic mixes, and adverse currency movements. “But notwithstanding those, I think the margin is in pretty good shape.” 

ResMed reported $422.5 million in revenues for the third quarter ended March 31, a 6% increase compared to the same period last year. It reported a net income of $91 million, a 1% increase.

In the Americas, specifically, ResMed reported revenues of $250.9 million, a 15% increase. For Europe and Asia Pacific combined, it reported revenues of $171.6 million, a 6% decrease.