Resmed Inc. · NYSE:RMD
Resmed — Q3 2019 Earnings Presentation
51 slides from Resmed's earnings presentation, May 2, 2019
Slide 1: Investor Presentation Q3 2019
Investor Presentation Q3 2019 May 2, 2019
Slide 2: Presentation of financial information & forward-looking statements
Presentation of financial information & forward-looking statements Historical financial and operating data in this presentation reflect the consolidated results of ResMed Inc., its subsidiaries, and its legal entities, for the periods indicated. This presentation includes financial information prepa
Slide 3: Overview
Overview © 2019 ResMed I Q3 2019 Investor Presentation I 3
Slide 4: Who we are / what we do
Who we are / what we do • Listed on NYSE & ASX, ~$15B market cap • World-leading connected health company with more than 9 million 100% cloud-connectable devices ‒ More than 10 million patients in AirView monitoring ecosystem ‒ Nearly 80 million patient accounts in out-of-hospital care network • Inn
Slide 5: Why invest? – driving long-term shareholder value
Why invest? – driving long-term shareholder value Market Dynamics Growth & Innovation Financial Results • Underpenetrated • Global leader in • Historical revenue and markets in sleep & connected health for profit growth COPD sleep and respiratory • Recurring revenue care • Healthcare costs • Operati
Slide 6: Key demographic, political, and healthcare trends present multiple opportunities
Key demographic, political, and healthcare trends present multiple opportunities for ResMed Healthcare continues to rise in importance as a major topic on social and political agendas around the world. Increasing Chronic Aging Healthcare Costs Physician MACRO Disease Burden Population Growing Shorta
Slide 7: ResMed's 2025 strategy
ResMed’s 2025 strategy 250 million lives improved in out-of-hospital healthcare in 2025! Purpose Empower people to live healthier and higher quality lives in the comfort of their home Growth Focus Global health epidemics in sleep apnea, COPD, other major chronic conditions, and caring for patients w
Slide 8: Our Business - Sleep
Our Business - Sleep © 2019 ResMed I Q3 2019 Investor Presentation I 8
Slide 9: Sleep business strategy
Sleep business strategy Deliver a world-class patient experience through innovative solutions that lower overall costs for treating sleep apnea patients and improve clinical outcomes OPTIMIZE EFFICIENCIES DELIVER BEST-IN-CLASS EMBRACE AND ENABLE FOR PROVIDERS PATIENT EXPERIENCE INTEGRATED CARE MODEL
Slide 10: What is sleep-disordered breathing?
What is sleep-disordered breathing? • Abnormal respiration during sleep – the cessation of breathing or “sleep suffocation” • Most prevalent is obstructive sleep apnea – collapse of the upper airway despite ongoing effort • Other types include central sleep apnea -- lack of breathing and lack of eff
Slide 11: Global prevalence of obstructive sleep apnea (OSA)
Global prevalence of obstructive sleep apnea (OSA) presents opportunity to drive increased awareness AHI ≥ 5 AHI ≥ 15 Benjafield, et al. AJRCCM 2018 (abstract) 936,360,689 424,630,028 © 2019 ResMed I Q3 2019 Investor Presentation I 11
Slide 12: Sleep apnea is more than 80% undiagnosed
Sleep apnea is more than 80% undiagnosed 1 Peppard PE et al. Am J Epidemiol 2013 2 Young T et al. Sleep 1997 © 2019 ResMed I Q3 2019 Investor Presentation I 12
Slide 13: Sleep apnea is prevalent in other chronic conditions
Sleep apnea is prevalent in other chronic conditions Highly prevalent in key Stroke 62% chronic diseases 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 2
Slide 14: Transforming the treatment & management of sleep apnea
Transforming the treatment & management of sleep apnea Quiet Compact AirSense™10 AirSense™10 AutoSet for Her AirCurve™10 Comfortable Connected AirViewTM myAir™ © 2019 ResMed I Q3 2019 Investor Presentation I 14
Slide 15: Working with others to raise sleep as a public priority
Working with others to raise sleep as a public priority Consumer tech joint Sleep research joint venture with Dr. Oz venture with Verily and Pegasus Capital World’s first non- To study the health and contact sleep tracking financial impacts of mobile app untreated sleep apnea Shows people how Based
Slide 16: Our Business - Respiratory Care
Our Business - Respiratory Care © 2019 ResMed I Q3 2019 Investor Presentation I 16
Slide 17: Respiratory care strategy
Respiratory care strategy Changing the lives of COPD patients by bringing new solutions for unmet patient needs INNOVATE AND EXPAND TRANSFORM COPD WIN IN THE CORE INTO ADJACENCIES HEALTHCARE DELIVERY • Reach more COPD patients • Treat patients earlier in COPD • Build intelligent therapy solutions th
Slide 18: What is chronic obstructive pulmonary disease (COPD)?
What is chronic obstructive pulmonary disease (COPD)? COPD is a serious lung disease that over time, makes it hard to breathe Causes include: • smoking & second hand smoke • a history of childhood infections (could • pollution be a catalyst) • occupational exposure to noxious gases • genetic inherit
Slide 19: COPD is a large and growing market
COPD is a large and growing market • COPD is the third leading cause of death worldwide1 • More than 380 million people worldwide are estimated to have COPD2 ‒ Largely undiagnosed COPD sufferers in high-growth markets such as China, India, Brazil and E. Europe may be well over 100 million3 • Cost to
Slide 20: Respiratory Care: Our point of view
Respiratory Care: Our point of view • People with COPD are not well served by healthcare systems today ‒ Better solutions are needed for patients, physicians, care providers, and payers • Technology-enabled medical devices will be incorporated within integrated care models to more effectively manage
Slide 21: Full spectrum of solutions for respiratory care
Full spectrum of solutions for respiratory care High-Flow Therapy Portable Oxygen Concentrator AcuCare™ high flow Mobi™ Bilevel Ventilation Non-invasive Ventilation (NIV) Life Support Ventilation AirCurve 10 Lumis™ Stellar™ Astral™ Astral™ with RCM Patient Acuity © 2019 ResMed I Q3 2019 Investor Pre
Slide 22: Extending connected health solutions to COPD & asthma
Extending connected health solutions to COPD & asthma Acquired Propeller Health in January 2019 • Digital therapeutics company providing • Establishes ResMed as a leading provider of connected health solutions for people with COPD and asthma patient management COPD and asthma solutions • Uses sensor
Slide 23: Propeller has demonstrated compelling clinical outcomes
Propeller has demonstrated compelling clinical outcomes Impact of the Propeller solution tracking inhaler usage and location SABA use over time Symptom free days Healthcare utilization # per day % Events -25% 79 2.0 +32% 75 59 1.5 -50% 50 1.0 0.5 25 Uncontrolled 0.0 0 COPD 0 50 100 150 200 0 50 100
Slide 24: ResMed + Propeller = platform for entire patient journey
ResMed + Propeller = platform for entire patient journey Total Addressable Market: ~380 million patients1 Global COPD population Self-management & Smoking Cessation Inhaled Medications Supplementary O2 Ventilation 20% <1% of TAM 75% of TAM of TAM Increasing severity of disease COPD Stage I Stage II
Slide 25: Our Business - Software as a Service (SaaS)
Our Business - Software as a Service (SaaS) © 2019 ResMed I Q3 2019 Investor Presentation I 25
Slide 26: SaaS strategy – revolutionizing out-of-hospital healthcare
SaaS strategy – revolutionizing out-of-hospital healthcare Better patient experience. Improved clinical outcomes. Lower overall cost of care. • Single view of the patient • Comprehensive interoperability • Care transition, coordination and collaboration • Seamless access to information for patients
Slide 27: Broad portfolio of out-of-hospital verticals
Broad portfolio of out-of-hospital verticals Loved One/ Caregiver $$ Payor Patients Physician and Residents Hospital MatrixCare Home Hospice Private Skilled Senior Life Plan Health Duty Nursing Living Community Brightree HME Providers ResMed Sleep and RC Products & Solutions © 2019 ResMed I Q3 2019
Slide 28: History of successful SaaS acquisitions and integrations
History of successful SaaS acquisitions and integrations Key Company Location Date Product Status Halifax, NS Aug 2012 U-Sleep Integrated into AirView. Canada Knoxville, TN Feb 2015 GoJaysec Rebranded as GoScripts. Denver, CO Jul 2015 CareTouch 360 Rebranded as ResMed ReSupply. Lawrenceville, GA Feb
Slide 29: Summary
Summary The portfolio is financially attractive Supports growth for on its own and we existing businesses have leading (HME) and chronic positions in key diseases, sleep apnea segments. and COPD in particular. The ecosystem and scale creates our competitive advantage. © 2019 ResMed I Q3 2019 Investo
Slide 30: Digital Health Technology
Digital Health Technology © 2019 ResMed I Q3 2019 Investor Presentation I 30
Slide 31: Digital health technology supports all of ResMed
Digital health technology supports all of ResMed Purpose: Enable all ResMed businesses to achieve their business objectives by leveraging Healthcare Informatics technology and Advanced Analytics. Sleep Respiratory Care SaaS Digital Health Technology Technology + Advanced Analytics © 2019 ResMed I Q3
Slide 32: Digital health technology strategy
Digital health technology strategy Connected Health Ecosystem Data Analytics – The AI Journey • Innovate for core Sleep and RC business • Drive better clinical outcomes for patients and ‒ Device connectivity to the cloud business outcomes for providers ‒ Patient monitoring and management • Leverage
Slide 33: Solving for pain points in the physician/provider/patient ecosystem
Solving for pain points in the physician/provider/patient ecosystem Physician Provider/HME Patient Physician Evolution from Multiple systems Increased Real-time patient access to paper to increase documentation engagement meaningful electronic record potential for requirements clinical data systems
Slide 34: Improving outcomes for patients, physicians, and providers
Improving outcomes for patients, physicians, and providers ResMed Data Exchange Following the Managing one Engaging patients workflow for setting patient or many to in their therapy. up one patient. compliance. 1 2 3 © 2019 ResMed I Q3 2019 Investor Presentation I 34
Slide 35: Transforming 4+ billion nights of medical data into useful outcomes
Transforming 4+ billion nights of medical data into useful outcomes Global Leader in Cloud-Connected Medical Devices 3rd Party Diagnostics DIAGNOSIS THERAPY MONITORING & MGMT. PATIENT ENGAGEMENT BILLING & INTEGRATIONS © 2019 ResMed I Q3 2019 Investor Presentation I 35
Slide 36: Global leadership in digital health
Global leadership in digital health AirView™ has over 9 million+ 10 million+ patients 100% cloud connectable devices worldwide 800,000+ diagnostic tests ~80 million accounts in processed in the cloud out-of-hospital care network 84 API calls per second 1.8 million+ patients have from integrators sig
Slide 37: Financial Results
Financial Results © 2019 ResMed I Q3 2019 Investor Presentation I 37
Slide 38: Key financial results
Key financial results Diversified revenue Q3 2019 by geography & by business $662.2M Revenue Europe, Asia +12% (+15% CC) and Other 59.2% 35% US, Canada Gross margin and Latin +100 bps America 65% $182.0M Non-GAAP operating profit* +15% $128.1M Non-GAAP net income* (3)% OOH SaaS $0.89 12% Non-GAAP EP
Slide 39: Focus on operating excellence and fiscal discipline driving operating leverage
Focus on operating excellence and fiscal discipline driving continued improvements in operating leverage ($ in millions) Non-GAAP Operating 26.9% 27.4% Profit Margin $750 $665 $591 $500 $250 $159 $182 $- 3Q18 3Q19 Non-GAAP Operating Income Non-GAAP Revenue © 2019 ResMed I Q3 2019 Investor Presentati
Slide 40: Track record of disciplined financial growth
Track record of disciplined financial growth Revenue ($B) Adjusted EPS Quarterly dividend 10% 9% CAGR CAGR $3.65 8% $2.5 CAGR $0.37 $2.42 $1.6 $0.25 LTM 3Q14 LTM 3Q19 LTM 3Q14 LTM 3Q19 LTM 3Q14 LTM 3Q19 Fiscal Years ended June 30 © 2019 ResMed I Q3 2019 Investor Presentation I 40
Slide 41: Proven capital management
Proven capital management Capital Deployment Free Cash Flow returned Increasing Dividend Investment for Growth to Shareholders New Products Last twelve months combined YTD FY2019 dividend payout ratio of 41% of adjusted net Geographic expansion dividend and stock income repurchase = 67% of f
Slide 42: Recognized by Forbes at #1 in category for corporate citizenship
Recognized by Forbes at #1 in category for corporate citizenship Increased awareness Eliminating Responsible Minimizing pollution Product stewardship and continual unnecessary waste compliance improvement We work to eliminate We are minimizing We design and develop We fulfill all relevant and We dri
Slide 43: In the last 12 months, we changed more than 14 million lives
In the last 12 months, we changed more than 14 million lives with our products and improved nearly 80 million more via our out-of-hospital care network Our aspiration is to improve © 2019 ResMed I Q3 2019 Investor Presentation I 43 250 million lives in 2025
Slide 44: Why invest? – driving long-term shareholder value
Why invest? – driving long-term shareholder value Market Dynamics Growth & Innovation Financial Results • Underpenetrated • Global leader in • Historical revenue and markets in sleep & connected health for profit growth COPD sleep and respiratory • Recurring revenue care • Healthcare costs • Operati
Slide 45: Contact Investor Relations
Contact Investor Relations Phone: (858) 836-5971 Email: investorrelations@resmed.com Website: www.investors.resmed.com © 2019 ResMed I Q3 2019 Investor Presentation I 45
Slide 46: Appendix
APPENDIX © 2019 ResMed I Q3 2019 Investor Presentation I 46
Slide 47: Market-leading connected health solutions
Market-leading connected health solutions Pioneering innovations and providing clinical evidence that support better patient outcomes and improved business efficiencies for customers Labor World’s largest study for adherence % Costs2 59% 21 patient adherence with automated > 128,000 patients complia
Slide 48: Improving adherence to therapy
Improving adherence to therapy ResAdhere: remote monitoring + mask resupply drive improved adherence In a study of ~100k patients with AirView cloud-connected devices… 100 100% Probability on Therapy (%) 84% 66% 0 Resupply group (AirView + Brightree) 90 360 Control group (non-resupply) Time to Drop
Slide 49: Big data analysis drives insights for treatment of central sleep apnea
Big data analysis drives insights for treatment of central sleep apnea Patients with treatment-emergent central sleep apnea (CSA) are two times more likely to terminate therapy • Opportunity to rethink conventional therapeutic options • Minimize risk of therapy termination through early diagnosis •
Slide 50: Reducing Mortality with PAP Therapy
Reducing Mortality with PAP Therapy U.S. multicenter, population-based cohort study • Positive airway pressure therapy associated with a 62% lower risk of all-cause mortality • Death rate was twice as high for persons who did not receive positive airway pressure therapy ‒ (24.7 vs 12.8 deaths per 10
Slide 51: Opportunity to shift care from hospital to home
Opportunity to shift care from hospital to home • Healthcare costs are on the rise • Combining non-invasive ventilation (NIV) with home oxygen therapy (HOT) − Reduces hospitalization and mortality by 51% − Increases time to hospital readmission or death by ~90 days Admission-free survival by treatme