ResMed’s strategy pays off

SAN DIEGO – ResMed’s card-to-cloud CPAP device, launched earlier in 2022, provided “meaningful growth” for the first quarter of the company’s fiscal year 2023, said CEO Mick Farrell. 

The AirSense 10 card-to-cloud device is one of the company’s workarounds for pumping product into the market amid a competitor’s recall that has significantly increased demand and supply chain challenges that have limited the supply of semiconductor chips, which are needed to make the AirSense 11 cloud-connected device. 

“We are building on the success we achieved last quarter with our reengineered AirSense 10 card-to-cloud device,” Farrell said during a conference call to discuss the company’s financial results. “Customer acceptance has been strong, particularly in the United States, and this has enabled us to substantially increase shipping volumes to support patient demand, while we continue to fight through global supply chain challenges.” 

Overall, device sales in the U.S., Canada and Latin America increased by 23% in the first quarter. 

Farrell did note that adoption of the card-to-cloud device hasn’t been as strong outside of the U.S., because countries like France and Japan have reimbursement models that prioritize digital health. 

“Customers in (these) countries prefer to work with the limited product flow of our 100% cloud-connectable devices rather than change their workflows for card-to-cloud models,” he said. “While this means that some patients will have longer wait times in these regions, it does show the power of our long-term digital health strategy of lowering labor costs, improving efficiency and improving patient outcomes.” 

Farrell and CFO Brett Sandercock also addressed how, as supply chain challenges ease up and ResMed is able to produce more AirSense 11 devices, the company will deal with the potential for what one analyst called “inventory obsolescence” for its card-to-cloud devices. 

“I think, at the moment, the market is very much characterized by excess demand,” Sandercock said. “So, we’re still trying to meet that, and I think it’s going to be with us for a while.” 

“It's a complex and moving dynamic equation,” Farrell added. “The latest moving part in it is that the AirSense card-to-cloud has been coming out the gate incredibly strong, and we expect that to continue. That may mean increasing some AirSense 11 allocation to places like France or Japan, where they aren't seeing the same adoption. So, it's a thing that we look at daily, weekly, monthly in our production, shipping and delivery schedules.” 

Sandercock said, which ResMed continues to experience challenges, the company is seeing “a more predictable supply chain environment.” 

“This gives us confidence around our expectation of increasing device production in fiscal year '23 relative to fiscal year '22,” he said.