ResMed: Watch for Mobi POC early next year

Company officials also comment on growth for CPAP devices, ‘blip’ in growth for Brightree
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Friday, October 26, 2018

SAN DIEGO – ResMed is still keeping its plans for the Mobi portable oxygen concentrator largely under wraps.

During a conference call on Thursday to discuss ResMed’s financial results for the first quarter of fiscal year 2019, CEO Mick Farrell reiterated that the company plans for a “full product launch” in the third quarter, meaning sometime in January-March. He also doubled down on the company’s plans to use a “go-to-market” model that focuses on a “full partnership with our HME customers.”

“Our competitors are competing with the channel in this space, and I just don’t think it’s a smart strategy,” Farrell said. “I think you want to partner with the channel and really drive value to that end user patient…(Providers) should be the ones to provide portable oxygen.”

ResMed first made a play to enter the home oxygen therapy market in 2016, when it bought Austin, Texas-based Inova Labs. It formally introduced the Mobi in January of this year, but the product has been under a controlled launch ever since.

Among the scant details on the Mobi from the call: The product is being manufactured in a facility in Singapore, which Farrell and COO Robert Douglas have visited; and it has what Douglas calls “the right balance of features that make it the most usable product.”

“We’ve got a really good battery life,” he said. “We’ve got a great weight and a really good oxygen output that lets people be mobile and to use the device with confidence.”

Other than that, company officials advised analysts on the call to “watch this space.”

Devices dominate

Flow generator sales were the highlight of ResMed’s financial results: They grew 14% year over year on a global constant currency basis in Q1, powered by 20% growth in Europe, Asia and rest of the world. Growth was 9% in the U.S., Canada and Latin America.

“We continue to build our market share as healthcare providers and physicians around the world are choosing ResMed devices not just for their intrinsic quality but also for the sustainable value proposition of the digital health solutions we offer as part of our ecosystem,” Farrell said.

Mask sales grew 10% year over year, led by 11% growth in the U.S., Canada and Latin America. Growth was 6% in Europe, Asia and rest of the world.

Brightree ‘blip’?

One analyst noted a high single digit organic growth rate for Brightree in Q1, “kind of a slowdown” compared to FY 2018. “Is that a one quarter blip or is the high-single-digit growth rate kind of a go-forward rate,” he asked.

Farrell noted that total revenue from the Software-as-a-Service line of business increased 25% in Q1 for Brightree and HEALTHCAREfirst, a $126.3 million acquisition that closed in the quarter.

“Look, it’s the first quarter that we were integrating HEALTHCAREfirst,” he said. “We have a team in home health and hospice at Brightree working on the integration of those two platforms and in the core HME platform at Brightree.”

Farrell said a return to low-double-digit growth is “absolutely” realistic as the competitive bidding landscape improves, as providers clamor for more efficiency and as new solutions come to market.

“I’m very confident that we can start to get that double-digit growth out of the core Brightree platform, while also integrating HEALTHCAREfirst and tying our home health and hospice value props together as we grow in the HME industry,” he said.