Slide 1: Investor Presentation Q1 2017
Investor Presentation Q1 2017 January 5, 2017
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 27+ 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 Improve patient quality of life New Market Options 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 digital health solutions did not exist in respiratory medicine, so we led the market with cloud connected respiratory medical devices… …others had to follow Smaller, Quieter, More Comfortable… and More Connected solutions © 2016 Re
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: Connected Care revolutionizes patient-provider relationships
Connected Care revolutionizes patient-provider relationships Providers are looking for tools that allow fewer caregivers to manage more patients at a lower cost Patients are looking for simple ways to track their health outcomes and to improve their quality of life © 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 over 2 million cloud-connected medical devices liberating data every day 3rd Party Diagnostics DIAGNOSIS THERAPY MONITORING & MGMT. PATIENT ENGAGEMENT BILLING Astral™ with RCM © 2016 ResMed I 8
Slide 9: World's largest provider of Connected Care solutions at home
World’s largest provider of Connected Care solutions at home AirView™ has over 2 million+ patients monitored 3 million patients at home with connected care 200,000+ diagnostic tests Brightree has 45 million+ processed in the cloud patient accounts as part of its post‐acute care network 15 API calls
Slide 10: AirSolutions – Drives Better Patient Outcomes
AirSolutions™ – Drives Better Patient Outcomes Proven automated compliance coaching Patient engagement achieving compliance 3 2016 Kaiser Permanente® Study 1 • 2016 Clinical study: myAir™ significantly improved compliance with a 24% relative improvement in Medicare defined adherence in the first 90
Slide 11: AirSolutions – Increases Business Efficiencies
AirSolutions™ – Increases Business Efficiencies Efficient management & business growth 1 Clinically-Proven Efficiencies 2,3 • Reduced unreached • 59% reduction in labor 2 patients by 87% Standard-of- Results Care Group U-Sleep Group • Increased new patient Mean Minutes of Coaching 58.3 ± 25 23.9 ± 2
Slide 12: Brightree solutions increase post acute care profitability
Brightree® solutions increase post acute care profitability AirSolutions ResMed Data Exchange Brightree Offerings – for core HME customers as well as new Home Health and Hospice channels Home Health & Document Core HME Platform Physicians Referrals Hospice Management • Billing & Inventory Management
Slide 13: 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 14: 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 14
Slide 15: Global Leader in Sleep Apnea Management
Global Leader in Sleep Apnea Management AirSense™ 10 myAir™ AirViewTM © 2016 ResMed I 15
Slide 16: 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 Improve patient quality of life New Market Options Prevent chronic disease progression • Chronic disease management Reduce healthcare system co
Slide 17: COPD is a leading cause of mortality and morbidity
COPD is a leading cause of mortality and morbidity • Chronic Obstructive Pulmonary Disease (COPD) is the third leading cause of death worldwide1 • More than 200 million people worldwide are estimated to have COPD2 ‒Largely undiagnosed COPD sufferers in high-growth markets such as China, India, Brazi
Slide 18: India and China are facing an epidemic in COPD
India and China are facing an epidemic in COPD • The World Health Organization (WHO) Average PM2.5 concentration, micrograms per m3 estimates that 11% of deaths attributed to WHO Annual Guideline ambient air pollution are for chronic 0 25 50 75 100 125 obstructive pulmonary disease (COPD) Delhi Luck
Slide 19: Non-invasive Ventilation: Reduces hospital re-admissions
Non-invasive Ventilation: Reduces hospital re-admissions Combining non-invasive ventilation with home oxygen therapy: • Reduced the likelihood of hospital re-admission or death by 51% • Increased time to hospital re-admission or death by about 90 days References: Murphy et al. European Respiratory S
Slide 20: Non-invasive Ventilation: Reduces mortality risk in COPD
Non-invasive Ventilation: Reduces mortality risk in COPD • Mortality risk reduced by over 60% on a relative basis using long-term non-invasive 0.40 ventilation (NIV) treatment in COPD Control Group Intervention Group p=0.0004 • One-year mortality in the two matched 0.30 COPD cohorts was: Cumulative
Slide 21: Expanding in COPD: Acquisition of Inova Labs
Expanding in COPD: Acquisition of Inova Labs • Long-term oxygen therapy, with best-in-class portability and mobility for COPD patients • Broadens ResMed’s platform for growth in COPD therapy; leverages our global distribution network • Future opportunity to introduce healthcare informatics solutions
Slide 22: Expanding in Respiratory Care and China: Curative
Expanding in Respiratory Care and China: Curative • Accelerates our investment for growth in China, with local partnerships • Complementary sleep and respiratory care products • Curative will retain product manufacturing, sales, and R&D in China • ResMed and Curative – the combined market leader in
Slide 23: Full spectrum of products for Respiratory Care
Full spectrum of products for Respiratory Care Life Support Ventilation High-Flow Therapy (HFT) AcuCare™ high flow nasal cannula Astral™ Astral™ with RCM Non-Invasive Ventilation (NIV) Product Features Portable Oxygen Concentrator Bilevel Lumis™ Stellar™ Activox™ AirCurve 10 Patient Requirements © 2
Slide 24: Healthcare Informatics for COPD
Healthcare Informatics for COPD Cost effective management of COPD patients in home – preventing hospitalization Changes in lifestyle and disease progression – Astral™ with RCM monitored daily AirCurve 10 © 2016 ResMed I 24
Slide 25: Significant opportunity to shift care from hospital to home
Significant 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 $0 Source: Organization for Economic Cooperation and Development, OECD Health Statistics 2015, July 2015
Slide 26: Holy Grail of Healthcare: Reduce Costs. Improve Outcomes.
Holy Grail of Healthcare: Reduce Costs. Improve Outcomes. • Improve quality-of-life for patients • Prevent chronic disease progression • Reduce costs of managing chronic disease © 2016 ResMed I 26
Slide 27: ResMed's Growth Strategy
ResMed’s Growth Strategy Changing lives with every breath Horizon 3 20 million lives changed by 2020 Invest in Portfolio of Number of Patient Lives Impacted Improve patient quality of life New Market Options Prevent chronic disease progression • Chronic disease management Reduce healthcare system co
Slide 28: Sleep Apnea: Highly prevalent in key chronic diseases
Sleep Apnea: Highly prevalent in key chronic diseases Stroke 62% Atrial Fibrillation 49% Heart Failure 76% Type 2 Diabetes Drug-Resistant Hypertension 72% 83% Morbid Obesity 77% References: Gami AS et al. Circulation 2004, O’Keefe and Patterson, Obes Surgery 2004, Logan et al. J. Hypertension 2001,
Slide 29: Horizon 3: Heart Failure and Atrial Fibrillation
Horizon 3: Heart Failure and Atrial Fibrillation CAT-HF shows positive outcome in HFpEF & AF CAT-HF clinical trial Positive results from sub-studies: • Evaluate the effect of adaptive servo-ventilation in acute decompensated heart failure (HF) patients • Primary Outcome ‒ Global Rank Endpoint: Rank
Slide 30: S+ by ResMed sleep wellness system
S+ by ResMed sleep wellness system Sounds synchronize with your breathing, slow breath rate down, and help you to Relax fall asleep Daily “Sleep Score” out of 100 based on quality and quantity of sleep, including REM, deep sleep, light sleep; daily advice Record algorithms Wake up at the optimal tim
Slide 31: Disciplined financial track record
Disciplined financial track record Revenue ($B) Adjusted Net Income ($M) 8% 10% CAGR $1.8 CAGR $379 $234 $1.2 2011 2016 2011 2016 Adjusted EPS Free Cash Flow ($M) 12% CAGR $2.68 18% CAGR $489 $1.49 $217 2011 2016 2011 2016 © 2016 ResMed I 31
Slide 32: Q1 2017 Results
Q1 2017 Results Key Financial Metrics Q1 2017 $465.4M Revenue +13% (13% CC) Non-GAAP gross margin* 58.9% $111.0M Non-GAAP operating profit* +11% $87.7M Non-GAAP net income* +4% $0.62 Non-GAAP EPS* +5% Cash flow from operations $86.2M Free cash flow $71.7M * Excludes the impact of amortization of acq
Slide 33: Diversified revenue sources by region & product
Diversified revenue sources by region & product Brightree 7% EMEA 25% Americas Devices 65% 56% Masks and APAC Accessories 10% 37% Note: Represents Q1 2017 revenue breakdown © 2016 ResMed I 33
Slide 34: Innovation leadership. Global scale. Customer-driven.
Innovation leadership. Global scale. Customer-driven. Product and Solution Global Infrastructure Market Focused Innovation and Expertise • World-class quality and operational • Homecare sales force in the U.S., • Strong global R&D organization with excellence in our global supply chain France, Germa
Slide 35: Operating Excellence – a continuous process at ResMed
Operating Excellence – a continuous process at ResMed Invest in innovation ResMed’s & unlock acquisition Operational value Excellence Approach Best in Class Talent Efficiencies in product supply & Operating manufacturing Leverage Grow Operating Margins © 2016 ResMed I 35
Slide 36: Delivering Operating Leverage
Delivering Operating Leverage SG&A 483 473 450 431 31.5% 402 371 329 29.9% 290 30.1% 29.3% 29.0% 28.4% 28.2% 26.2% FY’09 FY’10 FY’11 FY’12 FY’13 FY’14 FY’15 FY’16* SG&A expenses (US$M) SG&A expenses as % of revenue *Excludes $5.5 million in acquisition and integration related expenses in FY16 © 2016
Slide 37: Proven Capital Management
Proven Capital Management Capital Deployment Free Cash Flow returned Increasing Dividend Investment for Growth to Shareholders FY 2016 dividend payout ratio New Products Last twelve months combined of 48% of net income dividend and stock repurchase Geographic expansion = 47% of free cash flo
Slide 38: Acquisitions - new products, services and channels for growth
Acquisitions - new products, services and channels for growth New Informatics New Product Lines Solutions or Channels Expanding Distribution Channels © 2016 ResMed I 38
Slide 39: Changing Lives with Every Breath
Changing Lives with Every Breath In the last 12 months, we changed more than 10 million lives. Our aspiration is to change 20 million lives by 2020 © 2016 ResMed I 39
Slide 40: ResMed - Proven Global Leader driving Long-Term Growth
ResMed - Proven Global Leader driving Long-Term Growth 27+ 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 41: Contact Investor Relations
Contact Investor Relations Phone: (858) 836-5971 Email: investorrelations@resmed.com Website: www.investors.resmed.com © 2015 ResMed I 41