Resmed Inc. · NYSE:RMD
Resmed — Q2 2016 Earnings Presentation
39 slides from Resmed's earnings presentation, Mar 14, 2016
Slide 1: Investor Presentation Q2 2016
Investor Presentation Q2 2016 March 14, 2016
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements contained in this presentation that are not historical facts are “forward- looking” statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements — including statements regarding ResMed's projections of future re
Slide 3: ResMed - Proven Global Leader driving Long-Term Growth
ResMed - Proven Global Leader driving Long-Term Growth 26+ years Disciplined of successful innovation, financial management market development and market growth Leader Proven in innovation for products capital deployment history, in sleep apnea, COPD, NMD committed to returning excess and other chro
Slide 4: ResMed's Growth Strategy
ResMed’s Growth Strategy Changing lives with every breath Horizon 3 20 million lives changed by 2020 Invest in Portfolio of Number of Patient Lives Impacted New Market Options Improve patient quality of life Prevent chronic disease progression • Chronic disease management Reduce healthcare system co
Slide 5: ResMed is leading the way with the most connected devices
ResMed is leading the way with the most connected devices Meaningful connectivity solutions did not exist, so we pioneered 100% cloud connected respiratory medical devices Others had to follow Smaller, Quieter, More Comfortable… and More Connected © 2016 ResMed I 5
Slide 6: Healthcare Informatics – the new basis of competition
Healthcare Informatics – the new basis of competition • Liberate Healthcare Data • Improve Outcomes • Unlock Value © 2016 ResMed I 6
Slide 7: Informatics is revolutionizing the patient-provider relationship
Informatics is revolutionizing the patient-provider relationship Providers are looking for tools that allow fewer people to manage more patients Patients are looking for simple ways to track their health outcomes © 2016 ResMed I 7
Slide 8: We are the global leader in Connected Care for med devices
We are the global leader in Connected Care for med devices We have well over 1 million cloud-connected med devices liberating data daily 3rd Party Diagnostics DIAGNOSIS THERAPY MONITORING & MGMT. PATIENT ENGAGEMENT BILLING © 2016 ResMed I 8
Slide 9: World's largest provider of connected solutions
World’s largest provider of connected solutions AirView™ has over 1 million + patients 2.5 million patients monitored at home with connected care 122,000 + diagnostic tests ~ 60,000 user accounts as processed in the cloud customer nodes in digital health 8 API calls per second 900 patients a day fro
Slide 10: Air Solutions – Increased Efficiency, Better Outcomes
Air Solutions – Increased Efficiency, Better Outcomes Efficient management & business growth 1 Patient engagement achieving compliance 2 • Reduced unreached patients • 50% of patients are by 87% compliant in 23 days or • Increased new patient setups less by 55% • 84% of patients are • Saved labor co
Slide 11: Brightree Advances our Connected Care Solutions
Brightree Advances our Connected Care Solutions Strengthens ResMed’s global leadership in connected care solutions across all Three Horizons of ResMed’s growth strategy • $800 million, all cash • 2015 EBITDA multiple: 13.5x with tax benefits, 18.8x without Transaction • Closing expected by the end o
Slide 12: We can reduce costs of key chronic diseases
We can reduce costs of key chronic diseases Annual costs per chronic condition in the U.S. $405 billion $245 billion $165 billion* Disease and Stroke $150 billion Cardiovascular $60 billion Diabetes Sleep Apnea Obstructive Obesity Asthma CDC, Vital Signs, Eric A. Finkelstein, et al, Health McKinsey
Slide 13: Sleep apnea is a huge, underpenetrated market
Sleep apnea is a huge, underpenetrated market Sleep Heart Health Study: 26% of adults have sleep apnea Eastern Europe China South Korea India Brazil <15% penetration <10% penetration <1% penetration High growth markets © 2016 ResMed I 13
Slide 14: Global Leader in Sleep Apnea Management
Global Leader in Sleep Apnea Management AirSense™ 10 myAir™ AirViewTM © 2016 ResMed I 14
Slide 15: ResMed's Growth Strategy
ResMed’s Growth Strategy Changing lives with every breath Horizon 3 20 million lives changed by 2020 Invest in Portfolio of Number of Patient Lives Impacted New Market Options Improve patient quality of life Prevent chronic disease progression • Chronic disease management Reduce healthcare system co
Slide 16: COPD is a large and growing market
COPD is a large and growing market • COPD is estimated to be the 3rd leading cause of death worldwide by 2020 • More than 200 million people worldwide are estimated to have COPD1 ‒ Including largely undiagnosed sufferers in high-growth markets such as China, India, Brazil and E. Europe, the COPD pop
Slide 17: Air pollution is elevated in high growth countries
Air pollution is elevated in high growth countries Average PM2.5 concentration, micrograms per m3 • The World Health Organization (WHO) WHO Annual Guideline estimates that 11% of deaths attributed to 0 25 50 75 100 125 ambient air pollution are for chronic Delhi obstructive pulmonary disease (COPD)
Slide 18: NIV: Huge potential to improve outcomes in COPD
NIV: Huge potential to improve outcomes in COPD • Mortality risk reduced by over 60% on a relative basis using long-term non-invasive 0.40 Control Group ventilation (NIV) treatment in chronic obstructive pulmonary disease (COPD) Intervention Group p=0.0004 0.30 • One-year mortality in the two matche
Slide 19: Expanding in COPD: Acquisition of Inova Labs
Expanding in COPD: Acquisition of Inova Labs • Builds broader platform for growth in respiratory care; leverages ResMed’s global distribution channels • Future opportunity to introduce healthcare informatics solutions into portable oxygen concentrators – connected care for COPD • Adds long-term oxyg
Slide 20: Expanding in Respiratory Care and China: Curative
Expanding in Respiratory Care and China: Curative • Accelerated strategy to invest and grow in China, with local partnerships • ResMed and Curative – the combined market leader in China • Complementary sleep and respiratory care products • Curative will retain product manufacturing, sales, and R&D i
Slide 21: Full spectrum of products for Respiratory Care
Full spectrum of products for Respiratory Care Life Support Ventilation Portable Oxygen Concentrator Astral™ Non-invasive Ventilation (NIV) Product Features Activox™ Stationary Oxygen Concentrator Bilevel Lumis™ Stellar™ AirCurve 10 Activox DUO2™ Patient Requirements © 2016 ResMed I 21
Slide 22: Healthcare Informatics
Healthcare Informatics Click to edit forstyle Master title COPD Cost effective to manage COPD patients in the home and keep them out of hospitals Changes in lifestyle and disease progression need to be monitored on a daily basis © 2016 ResMed I 22
Slide 23: Opportunity to shift care from hospital to home
Opportunity to shift care from hospital to home $10,000 8,713 Healthcare Costs per Capita (USD) $8,000 6,325 $6,000 4,819 4,904 4,351 4,124 3,713 3,866 $4,000 3,453 3,077 3,235 $2,000 $0 Source: Organization for Economic Cooperation and Development, OECD Health Statistics 2015, July 2015. As compile
Slide 24: Holy Grail of Healthcare: Reduce Costs. Improve Outcomes.
Holy Grail of Healthcare: Reduce Costs. Improve Outcomes. • Improve quality-of-life for patients • Prevent chronic disease progression • Reduce costs of managing chronic disease © 2016 ResMed I 24
Slide 25: ResMed's Growth Strategy
ResMed’s Growth Strategy Changing lives with every breath Horizon 3 20 million lives changed by 2020 Invest in Portfolio of Number of Patient Lives Impacted New Market Options Improve patient quality of life Prevent chronic disease progression • Chronic disease management Reduce healthcare system co
Slide 26: Sleep Apnea: Highly prevalent in key chronic diseases
Sleep Apnea: Highly prevalent in key chronic diseases Stroke 62% Atrial Fibrillation 49% Heart Failure 76% Type 2 Diabetes Drug-Resistant Hypertension 72% 83% Morbid Obesity 77% References: Gami AS et al. Circulation 2004, O’Keefe and Patterson, Obes Surgery 2004, Logan et al. J. Hypertension 2001,
Slide 27: Horizon 3: Atrial Fibrillation (AF)
Horizon 3: Atrial Fibrillation (AF) • Conclusion of study in JACC: ‒ CPAP use associated with reduced AF recurrence ‒ Reduced AF recurrence seen in two key groups • Patients who underwent catheter ablation • Patients who underwent non-ablation medical mgmt. ‒ Data included 7 studies with n=1,087 pat
Slide 28: S+ by ResMed sleep wellness system
S+ by ResMed sleep wellness system Sounds synchronize with your breathing, slow breath rate down, and help you to Relax fall asleep Daily “Sleep Score” out of 100 based on quality and quantity of sleep, including REM, deep sleep, light sleep; daily advice Record algorithms Wake up at the optimal tim
Slide 29: Disciplined financial track record
Disciplined financial track record Revenue ($B) Adjusted Net Income ($M) 9% 13% CAGR CAGR $367 $1.7 $0.9 $195 2010 2015 2010 2015 Adjusted EPS Free Cash Flow ($M) 15% 20% CAGR $2.57 CAGR $321 $1.26 $131 2010 2015 2010 2015 © 2016 ResMed I 29
Slide 30: Q2 2016 Results
Q2 2016 Results Key Financial Metrics Q2 2016 $454.5M Revenue +7% (13% CC) Non-GAAP Gross margin* 58.1% $116.9M Non-GAAP operating profit* +5% $97.5M Non-GAAP net income* +5% $0.69 Non-GAAP EPS* +6% $0.64 GAAP EPS Flat Cash flow from operations $147M Free cash flow $133M * Excludes the impact of rel
Slide 31: Diversified revenue sources by region & product
Diversified revenue sources by region & product EMEA 29% Masks and Accessories 43% Americas Flow 59% Generators 57% APAC 12% Note: Represents Q2 2016 revenue breakdown © 2016 ResMed I 31
Slide 32: Innovation leadership. Global scale. Customer-driven.
Innovation leadership. Global scale. Customer-driven. Product and Solution Global Infrastructure Market Focused Innovation and Expertise • World-class quality and operational • Homecare sales force in the U.S., • Strong global R&D organization with excellence in our global supply chain France, Germa
Slide 33: Operational Excellence – A continuous process at ResMed
Operational Excellence – A continuous process at ResMed Invest in innovation ResMed’s & unlock acquisition Operational value Excellence Approach Best in ClassTalent Efficiencies in product supply & Operating manufacturing Leverage Grow Operating Margins © 2016 ResMed I 33
Slide 34: Delivering Operating Leverage
Delivering Operating Leverage SG&A 473 31.5% 450 431 402 371 329 29.9% 290 229 30.1% 29.3% 29.0% 28.4% 28.2% 26.5% FY’09 FY’10 FY’11 FY’12 FY’13 FY’14 FY’15 YTD FY’16 SG&A expenses (US$M) SG&A expenses as % of revenue © 2016 ResMed I 34
Slide 35: Proven capital management
Proven capital management Capital Deployment Free Cash Flow returned Increasing Dividend Investment for Growth to Shareholders FY 2015 dividend payout ratio New products Last twelve months combined of 45% of net income Geographic expansion dividend and stock repurchase 2015 dividend per sh
Slide 36: Acquisitions - new products, services and channels for growth
Acquisitions - new products, services and channels for growth New Informatics New Product Lines Solutions or Channels Pending Close Expanding Distribution Channels © 2016 ResMed I 36
Slide 37: Changing Lives with Every Breath
Changing Lives with Every Breath In the last 12 months, we changed more than 9 million lives. Our aspiration is to change 20 million lives by 2020 © 2016 ResMed I 37
Slide 38: ResMed - Proven Global Leader driving Long-Term Growth
ResMed - Proven Global Leader driving Long-Term Growth 26+ years Disciplined of successful innovation, financial management market development and market growth Leader Proven in innovation for products capital deployment history, in sleep apnea, COPD, NMD committed to returning excess and other chro
Slide 39: Contact Investor Relations
Contact Investor Relations Phone: (858) 836-5971 Email: investorrelations@resmed.com Website: www.investors.resmed.com © 2015 ResMed I 39