ResMed sets high expectations for mask sales

Company says it’s ready to ‘unleash’ sales force
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Friday, August 4, 2017

SAN DIEGO – ResMed expects to see a nice bump in mask sales in the first quarter of its fiscal year 2018, now that it has manufacturing “sufficiently ramped up” for two new masks, the N20 and F20, says CEO Mick Farrell.

The masks and accessories category in the Americas grew only 4% in the fourth quarter of fiscal year 2017, compared to 8% for devices.

“As we noted in our call 90 days ago, we expected to have mask supply constraints throughout the first half of the (fourth) quarter and (we expected to have) to get our manufacturing sufficiently ramped up so that we could be ahead of demand by June,” Farrell said during a conference call on Aug. 1 to discuss ResMed’s latest earnings. “We did just that. However, we clearly missed out on some perishable mask sales in April and May, while the N20 and F20 were in limited availability.”

For the Americas, ResMed reported revenues of $350.2 million for the fourth quarter, an 8% increase over the same period in 2016. Excluding contributions from Brightree, revenues were $314 million, a 6% increase. ResMed reported net income of $101.6 million, a 22% increase.

With “supply solidified” for the AirFit N20 nasal mask and F20 full-face mask, Farrell says ResMed’s sales force now has “full confidence” that when it makes a sale, the company can fulfill its commitment.

“We are now set to increase sales growth in masks for FY2018, as we unleash our sales force with these excellent products and full supply,” he said.

During the call, ResMed also gave an update on the LifeChoice Activox, a portable oxygen concentrator it inherited when it acquired Inova Technologies in 2016. Robert Andrew Douglas, president and COO, characterized the product as a “work in progress, (but) we’re making very good progress.”

“We’ve continued to work hard on the Activox, and we’ve actually made a number of improvements under the hood and we’ve seen a lot of improved performance,” he said. “But we’re not re-branding yet. We’re still waiting for further improvements. (It) remains a very good product and our teams are promoting it appropriately to key customers. We’re in it for the long haul, and we believe it’s going to be a very good business.”

Overall, ResMed reported revenues of $556.7 million for the fourth quarter, a 7% increase over to the same period in 2016. Excluding contributions from Brightree, revenues were $520.5 million, a 6% increase.

For all of fiscal year 2017, ResMed reported revenues of $2.1 billion, a 12% increase over 2016. Net income was $342.3 million, a 3% decrease.