ResMed to bring tech to bear on POC market

Friday, January 22, 2016

SAN DIEGO – ResMed plans to do for portable oxygen concentrators what it has done for CPAP machines. That is, make them connected devices that lower costs for HME providers and improve outcomes for patients.

During a Jan. 21 conference call to discuss second quarter financial results, ResMed officials provided some color to the company’s recent acquisition of Inova Labs, an Austin, Texas-based manufacturer of the Activox DUO2 integrated stationary and POC system, and the LifeChoice Activox POC.

“We like the products (and) we will continue to sell existing products,” said Mick Farrell, CEO of ResMed. “But we like even more the combination of the Inova portable oxygen concentrator engineering with ResMed’s healthcare informatics and what that synergy could bring.”

ResMedexpects to have a next generation POC—one with connected capabilities—out by 2020 “for sure,” Farrell said. In some ways, it will be second to market: O2 Concepts has rolled out a software platform that allows providers to access usage and other data from a Verizon modem in the company’s OxLife POC.

ResMed is zeroing in on the smaller but growing market for POCs, estimated to be about $200 million vs. $1.2 billion for the total market, because it’s the future.

“The POC market has very strong growth, mid- to high (single digit) to even low double digit growth year over year,” Farrell said. “We are really excited to participate in the POC market and bring our innovation to play.”

ResMed also outlined plans to expand Inova’s footprint globally, from the five to 10 countries Inova currently sells in, to the 100 countries it sells in.

“That alone represents a 10x to 20x multiple on the number of countries you can move into,” Farrell said.

ResMed’s connected solutions for sleep therapy, the AirSense 10 and AirCurve 10 platforms and Air Solutions software, were big contributors to the 17% increase in revenues for the Americas for the second quarter of fiscal year 2016. Individually, growth in flow generators was 23%; growth in masks and accessories was 11%.

Company officials acknowledge that the growth rate for flow gens would be difficult to sustain long term.

“I think we’ve now proven to our customers that we can drive efficiencies in their business with the platform,” said Jim Hollingshead, president, Americas. “So that’s a compelling offer and remains a compelling offer, even in light of competitor launches. We intend to grow our program and position ourselves above the market growth rate. But given the share we’ve taken, I don’t think the growth rate is sustainable indefinitely.”

Overall, ResMed reported revenues of $454.5 million for the three months ended Dec. 31, 2015, compared to $423 million for the same period in 2014, a 7% increase. It reported net income of $90.5 million vs. $91.2 million, a 1% decrease.