ResMed’s masks overshadow devices in Q2

Company also notes increased focus on SaaS business
Friday, January 25, 2019

SAN DIEGO – ResMed’s sales of masks and accessories in the U.S., Canada and Latin America again grew 11% year over year in the second quarter of its fiscal year 2019.

The company reported the same growth for the product category for Q1.

“We are continuing to see great traction with two of our flagship masks, the AirFit F20 in the full-face category and the AirFit N20 in the nasal category,” said Mick Farrell, CEO, during a conference call to discuss financial results for the quarter. “We are seeing strong growth across geographies for these two masks.”

Farrell also noted that ResMed’s AirFit F30, which was launched in Q1, is gaining traction, and another mask, the AirFit N30i, a top-of-head-connected nasal mask, was just launched in January in the U.S.

Sales of masks and accessories globally grew 10% in the quarter on a constant currency basis, also on par with Q1.

Also helping to buoy sales of masks and accessories in the quarter: re-supplies.

“Mask growth is driven by a couple of things,” said Jim Hollingshead, president, Sleep Business. “One is the new product launches are very strong—and we’re getting great feedback from our HME and healthcare provider customers globally and from patients—and then resupply continued at a very healthy clip.”

ResMed’s sales of CPAP devices in the U.S., Canada and Latin America grew 7% year over year in Q2, compared to 9% in Q1. Sales globally grew only 3% on a constant currency basis in the quarter, compared to 14%, as two countries, France and Japan, which recently began reimbursing more for telemonitored devices, ramp up device upgrades.

“While we have been thrilled with the digital health reimbursement changes in France and Japan during 2018, we expect the impact in France and Japan will be present for the next few quarters,” Farrell said.

Also during the call, Farrell noted ResMed’s “2025 strategy” of improving 250 million lives in out-of-hospital health care in 2025, identifying its growing software as a service business as a “growth focus” for meeting that goal. That business posted $63.3 million in revenues for the second quarter, a 63% increase over the prior quarter.

“Yes, clearly the 63% growth for the quarter included organic and inorganic growth in those business,” he said. “Without going into very low levels of detail, the Brightree core business grew in that sort of mid- to high-single digits area. We are looking throughout the next four, six, eight quarters and they have a very strong pathway back to double-digit growth.”