ResMed Inc. (NYSE:RMD) Q4 2023 Earnings Call Transcript

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And I think the AirSense 11 and all its features, it’s engagement with the patient, with compliance coach, and its ability to engage with them directly on the touchscreen has driven some demand as well. So all that together make me confident that over the fiscal year, we’re going to have strong demand. But as you go from Q4 to Q1, there’s a seasonal impact. The Northern European and U.S. markets take summer vacations, and these have impacts seasonally on the business. And so traditionally, Q4 to Q1 isn’t one up. I’m not giving guidance for it, but traditionally, that’s the way it happens. We are not — we are no longer supply constrained. We are back to a demand environment. And then there’s the factor of that number four competitor probably not coming back during the next 60 days through.

So the end of this 90-day period, but I’m not going to jump in and predict on that. All I’m going to say is we’re out there all day every day, driving demand gen of new patients in, we’re out there farming for patients who need to get a replacement device. And every day we’re engaging with patients on myAir and reminding them of the importance of a clean hygiene and a new mask and engagement with their digital apps. So all the above gives me very strong confidence for high growth of ResMed throughout the year. But I’m not going to call it on an every 90 day basis here. We just don’t do that on the top-line.

Operator: Thank you. Next question is coming from Chris Cooper from Goldman Sachs. Your line is now live.

Chris Cooper: Good morning — afternoon. Thank you. So Mick on AirSense 11, you sort of emphasized its importance for gross margin. You also said at the start of the call, you sort of expect this to remain on allocation for a few more quarters yet, I know this timeframe was probably a bit longer than you’d hoped. I just wanted to confirm whether that’s entirely a function of supply chain at this point, or I guess whether there’s any sort of strategic consideration to manage volumes during such an unusual competitive dynamic.

Mick Farrell: Yes, Chris, thanks for the question. We’ve really been focused on that patient and making sure no one’s left behind. As I said in an earlier question, and although the AirSense 11 is better margin for us, and it’s better innovation and it has a higher engagement on the myAir app, which drives engagement, adherence, mass resupply and everything. Our view is that if there’s a patient available and we have the parts and pieces and the ability to make an AirSense 10 take care of that demand now while we ramp AirSense 11, we’re going to do it and we’re going to take care of that patient. By the way, there’s some really strong upside for that patient in that the alternative is a competitor device, which would not be as small, quite, comfortable and connected.

And so they’d have a much worse experience than the AirSense 10 with a competitive one. So it’s better for the patient. It is slightly low margin for us, but we get that patient on therapy, and there is the better together with ResMed that it’s more likely, hopefully, that they get a ResMed mask and that they use that mask for the rest of their life. And so I think there’s an overlap there, if you like of altruism and the profit motive to do the right thing on a gross profit, cash flow driven environment. And we’re not going to manage just to a GM line and say, well, let’s not do that and make those products. And so it’s less I mean, it’s strategic in this way that our brand is about patient care. Our brand is about taking care of someone who’s suffocating and getting them out of hospital and doing that.

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