ResMed Inc. (NYSE:RMD) Q2 2023 Earnings Call Transcript

Mick Farrell: Yes, Saul, look, it’s a great question. We don’t split out our details on price. But I can give some sort of general color and maybe, Rob, Brett, maybe you want to add a little bit on for Saul to the color that we can provide. Competitive dynamics are very tight. Look, we were very open that we had a surcharge that we put the start of last year around the freight costs that were incredibly high, $12 and €12 across all devices and so on. We will start to actually take that away to get customer-by-customer and appropriately as we go through the year. And as we actually see — to Rob’s point earlier, as we see those freight costs come through our inventory, they don’t just come in a spot change, it takes time for the COGS reduction there to come through.

But in terms of that 41%, I can say it was materially improved by the AirSense 10 Card-to-Cloud and was able to get those devices there. But our ability, I think, also as we have started this quarter to turn AirSense 10 fully connected off-constraint, I think will continue to be a nice tailwind for our business there. But Brett, I’ll hand to you for any further color we can provide to Saul to help on his modeling on this great US flow generator growth.

Brett Sandercock: Yes. Thanks Mick. I mean the only thing I’d add, Saul, is that we — it was really the sleep devices or APAP devices are really strong as we got device availability that went straight into the market. So, that was really kind of driving that, which is obviously higher volume devices than, say, bi-levels, for example. So, that did definitely play a big part in that revenue growth.

Operator: Thank you. Next question is coming from David Low from JPMorgan. Your line is now live.

David Low: Thanks so much. Just a quick one. Mick you talked about being unconstrained on supply by the end of the calendar year and then I think to Sean’s question, you talked about different markets and regulatory approvals. So, the question I’ve got is will the AirSense 11 be unconstrained more quickly in the US? And can you give us any sort of sense as to when you expect that will be the case?

Mick Farrell: Yes. Thanks for the question David. Yes, clearly, AirSense 10 fully connected will be unconstrained first just because that platform has been in the market for a long period of time. We’ve got all the inventory, all the capabilities to drive it, and it’s regulatory approved in virtually every market, 140 around the world. And so it’s just much easier to turn that off-constraint and get it moving first. But yes, to your point, the smaller, the quieter, the more comfortable and the most connected and most clever device is the AirSense 11. As we get regulatory approvals and we’re going country-by-country on this. As we said, we just got Japan during the last quarter and we’re going to go country-by-country on this, when we get regulatory approvals and as we get supply starting to improve on those components, we can really ramp that up with all its great technology and really good cost advantages and patient-friendly advantages.

It’s got coaching capabilities and interaction with the patient on the screen that’s interactive and can do some really good over-the-air upgrades, but also over-the-air interactions with physicians and its connectivity to myAir, 55%. I mean almost vast majority of patients are being offered and almost for all them are saying, yes, I want to see my data every day and get a myAir score. So, it will go faster and less constrained in those markets where it has approval. I’m not going to predict the exact date that that will happen because we’ve got scenarios around that. But I think we will start to see that go off-constraints before the end of the calendar year because that’s when we’re going to be able to meet all the customer demand, which is our goal and with on a fast-track to do it this calendar year.