ResMed (NYSE: RMD) has seen a dramatic increase in demand for its sleep and respiratory care products after a a serious recall eliminated competitor Philips from the market for a year, according to CEO Mick Farrell.

But Farrell also explained during ResMed’s fourth quarter earnings call last night that the San Diego-based company is experiencing supply chain issues as it seeks to respond.

“The limitations of the global supply chain, including a shortage of electronic components, as well as ongoing freight constraints and costs, are impacting our ability to meet the unprecedented increase in demand for products. ResMed, “Farrell said on the call, transcribed by SeekingAlpha. He added that major producers have suggested that the shortages of chips and electronic components could last for 12 or even 18 months.

Demand is so high that ResMed has had to allocate products in a way that ensures that the patients who need them most need their ventilators and CPAPs first – the same kind of strategy that they have had to employ in the past. worst of the COVID-19 crisis in the United States last year.

“ResMed will not be able to fill the entire supply gap created by this situation caused by a competitor just 7 weeks ago. They were the second player in our market leadership position in almost all of the 140 countries we compete in the world, ”said Farrell.

“We are doing everything we can to partner higher and higher in our supply chain to increase our access to the sourcing of the past, the parts and components we need to manufacture at scale. “

Farrell predicts that ResMed will dramatically speed up the flow of its products, but that won’t happen until the first half of 2022.

Needham & Co. senior research analyst Mike Matson summed it up in the headline: “What happens when unstoppable demand meets real estate supply? Matson maintained his rating at Hold for RMD shares as he expects minimal growth in income and EPS in the fiscal year ended June 2023 as Philips re-enters the market and regains some of its market share .

ResMed reported profits of $ 195.1 million, or $ 1.33 per share, on sales of $ 876.1 million for the quarter ended June 30, 2021, for a gain of 9.7% and a sales growth of 13.7% compared to the fourth quarter of 2020.

Adjusted to exclude one-off items, earnings per share were $ 1.35, 7 cents ahead of The Street, where analysts were looking for EPS of $ 1.28 on sales of $ 783.18 million.

“Based on our latest supply chain insight and analysis, we see a trajectory of $ 300 million to $ 350 million in additional revenue in fiscal 2022 on top of our previously forecast revenue growth for the fiscal year 2022, ”said Farrell.

Investors responded by sending RMD shares of over 1% to $ 270.23 each in today’s morning trading. Mass device and MDO‘s MedTech 100 Index, which includes shares of the world’s largest medical device companies, edged down.


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