When Philips first began its massive recall of more than 5 million CPAP and BiPAP machines and other ventilators in mid-2021, its competitor ResMed swooped in to fill the void left behind—seemingly setting itself up to rake in untold millions in the process.
But that respiratory device crisis set in amid a backdrop of a supply chain dragged down by pandemic-related shortages, leading ResMed to miss out on about $100 million of the profits it had expected to reap in its fiscal year 2022 in the wake of the recall.
With Philips’ recall still unfortunately in full swing, however, ResMed has another chance to pump up its earnings for its 2023 fiscal year—which began July 1 for the company—and it doesn’t intend to waste that chance.
During a call with investors on Thursday, CEO Mick Farrell reported that snags in the supply chain are beginning to smooth out, putting ResMed on track to ramp up production in the coming months. He also described attending an event honoring ResMed’s suppliers last month, resulting in their renewed determination to help the company better meet its recall-induced demand.
“We showed our suppliers that increased component allocation for ResMed ultimately benefits patients, providers, physicians and all of our stakeholders worldwide,” he said. “Many attendees commented how the event helped them to better understand our strong patient focus here at ResMed, as well as our commitment to product quality and the patient-driven need for them to increase supply to ResMed.”
He continued, “As a consequence of these partnerships, our suppliers are responding positively, and I can share this, we expect steady increase in ResMed’s device production each quarter throughout this fiscal year and beyond.”
Though Farrell didn’t disclose specific numbers about those volume increases, Rob Douglas, ResMed’s president and chief operating officer, noted that they constitute some of ResMed’s highest-ever levels of production.
“We’re actually producing a huge amount more devices now than we were, say, before the pandemic or even before the competitive recall happened,” Douglas said on the call, adding that with access to more of the necessary technological components, “We’ll absolutely keep driving these volumes.”
For the first quarter of ResMed’s fiscal 2023, the devicemaker reported revenues of just over $950 million. That marks a 5% increase from the same period last year—what was, in turn, the first full quarter after Philips had launched its recall.
During Thursday’s call with investors, ResMed CFO Brett Sandercock attributed the rising revenues to both a general increase in demand for the company’s sleep apnea devices, as well as “ongoing device demand generated by our competitor’s product recall.”