The last 12 months have been nothing short of a whirlwind for ResMed. After finding itself scrambling to pick up the slack left in the wake of Philips’ massive respiratory device recall last June, it quickly saw its bank account swell to new proportions.
It wasn’t all smooth sailing, though. Just a few months into its quest to fill what CEO Mick Farrell had termed the “seemingly infinite demand” caused by Philips’ recall, ResMed had to temper its own expectations, citing supply chain restraints for the company’s connected devices.
Despite those troubles—which ultimately had ResMed shaving off about $100 million from the total it initially expected to reap from the recall—it was still a banner year for the CPAP machine maker. For its fiscal year 2022, which ended June 30, total revenues clocked in at about $3.58 billion, a solid 12% gain over 2021’s total, which landed just shy of $3.2 billion.
In just the fourth quarter of its 2022 fiscal year, ResMed raked in between $60 million and $70 million in earnings directly related to the Philips recall, CFO Brett Sandercock said during a call with investors Thursday. That brought the full year’s total to somewhere between $230 million and $250 million, Sandercock added, placing it at the higher end of the company’s previously adjusted estimates for that particular revenue stream.
Meanwhile, Farrell told investors to expect another year of massive demand for ResMed’s breathing support devices. He attributed that to indications that shortages of semiconductors and other necessary components are beginning to improve, as well as to the workarounds that ResMed has developed while waiting for those components to become readily available once again.
“We’re not out of the woods yet, but the compass is pointing to true north, and we are on top of it,” the chief executive said on Thursday’s call.
“We expect demand to be greater than supply for at least 12 more months, driven by the recall of one of our competitors primarily. The net result is that every device that we here at ResMed make during these next 12 months, we will sell as it leaves the production line to a warehouse and is shipped to a customer,” he continued. “We are looking at every angle to maximize supply and address this incredible demand these next 12 months.”
That lines up with Philips’ own forecasts: In its most recent earnings report, the Dutch devicemaker pushed the estimated wrap-up date for its repair-and-replace program to early 2023, a few months off from its original aim of the end of 2022. Even after all affected devices have been addressed, however, ResMed will still have the opportunity to continue claiming a greater share of the market, since Philips predicted that it won’t be fully back on its feet—that is, at the pre-pandemic and pre-recall levels of 2019—until 2025.
Even while struggling to completely meet the demand left by the Philips recall, ResMed has had no trouble spending the extra cash it’s earned from its competitor’s absence. So far in the first quarter of its fiscal year 2023, the San Diego-based company has made plans to purchase two German software developers.
The first of these, announced in June, is Medifox Dan, which builds software to help medical facilities manage their patients and practices, and train and educate both professional and family caregivers, and which ResMed put down $1 billion to acquire. That was quickly followed earlier this month with the announcement that ResMed would snap up Mementor and its insomnia-focused digital therapeutic for an undisclosed price.