ResMed Inc Appeals To A Younger Audience
As the leading provider of medical equipment for patients who suffer from sleep apnoea, ResMed will no longer cater solely to middle-aged men. Rather, chief executive Mick Farrell revealed that there is an increasing proportion of younger people who are being diagnosed with the illness. Specifically, this is a stark contrast to when Mr Farrell started in the firm twenty years ago. Back in the mid-1990s, the target audience surrounded snoring, middle-aged men who were coerced into attending the sleep laboratories by their partners.
Presently, the firm has witnessed a gradual shift where it transits to cater to females hailing from a younger age group and are less likely to be presented with snoring symptoms. On a global scale, the number of patients seeking treatment is approaching 900 million – all of whom have the tendency of suffocating in their sleep. The transition was uncovered as the firm’s revenue spiked close to 15 per cent to US$1.42 billion ($2.12 billion) for the six months ending 31 December 2019. Additionally, net profit soared 22 per cent to that of $US280.8 million.
ResMed’s products now have a global reach of 140 countries, and the firm is expected to capitalise on the coronavirus outbreak to aid in the treatment of respiratory conditions. This is because the firm is likely to experience a boost in demand for ventilators used to treat severe pneumonia cases. Despite being sceptical of the firm initially, health practitioners have now been prescribing ResMed technology and devices.
Evidently, ResMed had an adherence rate of close to 90 per cent, relative to pharmaceutical industry averages of 50-60 per cent. Speaking from a broader point of view, that effectively translates into nine in 10 people who require plastics on their faces every night. From the company’s perspective, the figure also translates into 5.5 billion nights of medical statistics. As such, with accessibility to these data, statistics obtained can certainly be transformed into life-changing insights.
More recently in January, ResMed was instructed to pay $37 million to settle a lawsuit with the Department of Justice (DOJ) over accusations made in five separate whistleblower lawsuits. The civil lawsuits believed that the company had violated the federal False Claims Act and Anti-Kickback Statute. Specifically, ResMed was faulted for providing complimentary or under-cost equipment and services to sleep laboratories. To worsen matters, ResMed would charge more should the sleep laboratory utilise a competitor’s equipment.
Meanwhile, ResMed remained firm and did not admit to any of its doings. However, ResMed has also agreed to eradicate the problem. This is evident in its fourth-quarter conference call where the firm announced that it would settle the ongoing lawsuit for $39.5 million. Nevertheless, the company, which is dual-listed both on NYSE and ASX, reported its most significant growth in the US, Latin America and Canada, where revenue soared 15 per cent in those regions in the three months leading to 31 December 2019. ResMed will issue a quarterly dividend of 39 cents a share on 19th March 2020, relative to 37 cents a share a year ago.
By Caroline Wong
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