ResMed looks for growth in resupplies
SAN DIEGO – ResMed invested $1 billion in acquisitions in fiscal year 2016. Now, the company is “laser focused” on getting a return on its investment, says CEO Mick Farrell.
“We have been able to put our balance sheet to work this fiscal year,” Farrell said during a July 28 conference call to discuss recent financial results.
ResMed reported net revenues of $342.5 million for the Americas for the fourth quarter of fiscal year 2016, a 19% increase compared to the same period last year. By product category, device sales generated $161 million, a 6% increase; and masks and other sales generated $134.6 million, a 10% increase.
Those masks may be one way to get an ROI on its investment from Brightree. ResMed plans to leverage the Brightree Connect platform to boost the resupply businesses of HME providers. (ResMed also has its own platform, ResMed ReSupply, which it built from its previous acquisitions of CareTouch and Jaysec.)
“I think there is a lot of runway (in the resupply business) as patients get more engaged with high-deductible health plans and health savings accounts in the U.S., and take more control of their own health care,” Farrell said. “They will invest the co-pay dollars or even full cash pay to get themselves involved in this.”
Farrell says patients on CPAP therapy typically replace their masks about twice a year. A patient himself, he replaces his four times a year.
“Any patient who puts a piece of plastic on their face every day for six, seven hours, I think would find that a hygienic and appropriate thing to do,” he said.
The resupply platforms allow providers to leverage this business in a cost efficient, cost effective way, says Jim Hollingshead, president of Americas.
“We have seen very good growth, both in terms of customers joining these platforms and (ResMed) growing the resupply business through them over the course of the year,” he said. “That’s an ongoing phenomenon for us.”
ResMed will have more to offer in terms of resupplies later this year, with a new mask scheduled to launch.
“There is some activity in 510(k)s and we do plan to launch at least one new mask before the end of the calendar year,” Farrell said. “That’s all the information I will give on that.”
Given its significant capital deployment, ResMed will continue to temporarily suspend its share repurchase program, Farrell says.