ResMed on POCs: ‘We don’t need (them)’

SAN DIEGO – ResMed incurred a $13.9 million restructuring expense in the second quarter of its fiscal year 2021 as a result of closing its portable oxygen concentrator business. 

The company stopped selling its Mobi POCs in November. 

“Going forward, the cessation of the POC business will have an immaterial impact on both group revenue and earnings per share,” said Brett Sandercock, CFO, during a conference call on Jan. 28 to discuss ResMed’s financial results for the second quarter of its fiscal year 2021. “We did not expect to incur additional expenses in connection with this activity in the future, and we have adjusted for this one-time expense within our non-GAAP results for the quarter.” 

ResMed introduced the Mobi in 2018 – the result of a collaboration between the company and Austin, Texas-based Inova Labs, which it acquired in 2016 – and made it widely available in the U.S. in early 2019. 

Company officials say the POC market didn’t evolve the way they expected it to, with providers and payers continuing to favor stationary oxygen concentrators, making POCs “not as attractive as five years ago.” 

“Especially in the U.S., reimbursement has always been upside down – sort of unfavorable for POC vs. stationary,” said Jim Hollingshead, president, sleep and respiratory care business. “We entered the category knowing that we’re innovating and feeling really good about the product, but then you see how reimbursement hasn’t changed and, in fact, has become less favorable. When you take that line of business and compare it to our overall portfolio, in relative terms, it’s not nearly as strong a profile as the other opportunities.” 

ResMed is, instead, focusing its attention and R&D dollars on serving early stage COPD patients through Propeller, a sensor that attaches to inhalers to improve adherence; mid-stage patients through high-flow oxygen therapy; and later stage patients through its non-invasive ventilators and lift support platform. 

“We don’t need POCs to help in our end-to-end digital pathway for COPD,” said CEO Mick Farrell. 

The COVID-19 pandemic has put a new focus on nasal high-flow oxygen therapy, company officials say, and, while it’s an emerging therapy with “virtually zero” reimbursement right now, they expect it to be a growth area for ResMed. 

“Ninety percent of our revenue is in the home and the idea of high-flow therapy in the home has a future,” Farrell said. “We think, given some of the clinical data coming out and the research we’re doing with providers around the world, that there is an opportunity to get patients out of the hospital and into the home with high-flow therapy, and (using it) as a stepping stone on the pathway to our non-invasive ventilators and life support ventilators and in combination with our drug delivery system. It’s very early days, but it provides that sort of bridge portfolio and we think was validated somewhat during COVID-19. We think this will be a good part of our homecare portfolio.”