ResMed bets on healthcare informatics

Friday, January 23, 2015

SAN DIEGO – Recent product launches that emphasize connected and data-driven sleep therapy fueled ResMed’s financial results for the second quarter of 2015, CEO Mick Farrell said during a conference call on Jan. 22.

Sales of flow generators in the U.S., including the recently launched AirSense 10 CPAP machine, were $111 million for the second quarter, a 25% increase over the same period last year. Driving the popularity of the AirSense 10, Farrell said: the Air Solutions platform, which includes, among other things, a monitoring and compliance management system.

“We are particularly pleased with the initial progress of our U.S. flow generator product launches with 25% year-on-year growth for that category,” he said. 

Big picture, ResMed reported $423 million in revenues for the second quarter, a 10% increase over the same period last year. It reported $91.2 million in net income, a 5% increase. ResMed reported $231 million in revenues in the Americas, specifically, a 12% increase.

In a nod to the Air Solutions platform, Farrell announced during the call that ResMed has created a new global business unit for Healthcare Informatics led by Raj Sodhi, the CEO and co-founder of Umbian, which ResMed bought in 2012. Umbian is the developer of U-Sleep, which ResMed has been using as the foundation of its compliance and management system.

“Healthcare informatics is now a core competency for our company,” he said. “It is a major area for investment that we are using to drive customer value. We are leading the digitization of medicine in the respiratory space, and we are just getting started.”

In additional to flow generators, ResMed saw growth in masks in the U.S. Masks, including the recently launched AirFit line, and other sales were $120 million in the second quarter, a 2% increase over the same period last year, thanks, in part, to pricing adjustments.

“We’ve talked about a change in pricing strategy that we had a few months ago, and what we’re seeing is we’re against tougher pricing competition right now through our March quarter than we have been,” said Jim Hollingshead, president of the Americas. “With growth, we’ll see improved results as the pricing sort of cascades through.”

As for CMS’s plans to roll out competitive bidding on a nationwide basis on Jan. 1, 2016? It will affect “a relatively small size” of ResMed’s overall global business.

“From our perspective, in the sleep space, it’s about 30% or so of the Medicare patients who are remaining,” said David Pendarvis, chief administrative officer and global general counsel.



ResMed's acquistion of Umbian in 2012 was a recognition that health informatics - data, if you will, would be a key driver in the treatment of sleep apnea. 

It is no secret that I have been a big fan of Umbian and their U-Sleep product since I met Raj back in 2011. 

Another demonstration of far-sightedness is recognition that CMS will do what it will do and that ResMed needs to understand the consequences and proceed accordingly.

Congratulations to Mick Farrell and the rest of his team on helping folks get a better night's sleep.