ResMed Q4 Earnings Call Highlights: Net profit miss, Margin improvement, GLP-1 opportunities

ResMed (ASX: RMD) reported an impressive June quarter result but earnings fell slightly short of analyst expectations. Despite ongoing concerns about the impact of GLP-1 drugs, management reiterated that they're driving more motivated patients into their funnel.

Q4 Earnings Highlights

• Revenue up 9% to US$1.22bn and 0.5% ahead of consensus (US$1.21bn)

• Gross profit up 15.6% to US$723.5m and 1.9% ahead of consensus (US$709.8m)

• Net profit after tax up 30.1% to US$306.3m but 0.5% below consensus (US$307.8m)

• Non-GAAP gross margin of 59.1%, up 60 bps compared to the previous quarter and ahead of 58.3% consensus, driven by favourable product mix, cost optimisation and manufacturing improvements

• Diluted EPS of 208 US cents per share or 0.4% below consensus (208.9 US cents)

Earnings Call Highlights

Market trends: "Media interest in sleep apnea and all the various therapies seems to be helping patients find their way to screening, diagnosis and therapy, and especially the lowest cost, most efficacious therapy with the best outcomes, which is positive airway pressure therapy." – CEO Michael Farrell

On GLP-1s: "We believe that increased utilization of GLP-1s to treat obesity will bring many new people into the healthcare funnel, activating them to see their primary care physicians, as they strive to achieve and maintain weight loss." – CEO Michael Farrell

On weight-loss drug users: "For patients prescribed a GLP-1 medication, the latest data show a 10.7 absolute percentage points higher propensity to start PAP therapy over those without a GLP-1 prescription." – CEO Michael Farrell

Dividend upgrade: "Today, our board of directors declared a quarterly dividend of $0.53 per share, representing an increase of 10% over our previous quarterly dividend, and reflecting the board's confidence in our operating performance." – CFO Brett A. Sandercock

Analyst Q&A Highlights

Freight costs: "We're seeing pressure on freight cost, particularly around the rates on the quite significant increases, I think everyone has seen those. So, that is – obviously will continue to be a headwind for us, but we think notwithstanding that, we should be in that 59% to 60% range on gross margin." – CFO Brett A. Sandercock

Cost optimisation: "But if we look forward, we have cost optimisation initiatives that we're getting back to now, whereas previously we were really just trying to meet demand and catching up. But now we're getting back to running more regular cost optimisation programs." – CFO Brett A. Sandercock

Philips re-entering the market: "Yeah, that competitor is back in a number of markets. And as we said last quarter or the quarter before, we were beating them from 2010 to 2019, 2020, before they had their recall. And we're going to beat them as they come back and we've shown that this quarter and we'll continue to show it going forward." – CEO Michael Farrell

GLPI-1s impact on CPAP usage: "We're definitely looking the churn rates and CPAP quitters, APAP quitters, BiLevel quitters and really looking in detail at it. I can tell you, in aggregate, we've seen no change on the data ... We're looking at real-world data and we're analyzing left, right and center, but we're not seeing an increase in quitter rates. If anything, we're seeing more motivated patients come in and holding on more."