ResMed Inc.

Hello, and welcome to ResMed's third quarter fiscal year 2023 earnings call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Amy Wakeham, Chief Communications and Investor Relations Officer. Please go ahead, Amy.

Great. Thank you, Kevin. Hello, everyone, and welcome to ResMed's third quarter fiscal year 2023 earnings conference call. This call is being webcast live, and the replay will be available on the investor relations section of our corporate website later today, along with a copy of the earnings press release and the presentation, both of which are available now. On the call today are Chief Executive Officer Mick Farrell and Chief Financial Officer Brett Sandercock. Following our prepared remarks, Mick and Brett will be joined by Rob Douglas, President and Chief Operating Officer, and David Pendarvis, Chief Administrative Officer and Global General Counsel, for our Q&A session. During today's call, we will discuss several non-GAAP measures. For a reconciliation of the non-GAAP measures, please see the supporting schedules in today's earnings release. Our discussion today will include forward-looking statements, including but not limited to expectations about our future financial and operating performance. We believe these statements are based on reasonable assumptions. However, our actual results could differ. Please review our SEC filings for a complete discussion of the risk factors that could cause our actual results to differ materially from any forward-looking statements made today. I'd like to now turn the call over to Mick.

Thanks, Amy, and thank you to our stockholders for joining us today as we review the results for the March quarter. Our third quarter fiscal year 2023 financial results reflect very strong performance across our entire business. Through the hard work of our ResMed team worldwide, we've been able to steadily improve supply and manufacturing output to deliver for customers and most especially for patients with now full market availability of our lifesaving products and therapy solutions. During the quarter, we were able to offer unconstrained access to cloud-connected AirSense 10 flow generator devices in North America, as well as improved access to those cloud-connected devices across our global markets. We continue to work through some supply chain constraints with our latest and greatest AirSense 11 platform, and we expect to steadily improve the global availability of AirSense 11 over the next several quarters. We are thrilled to have the Essence 10 platform off allocation and fully available to customers in the US and other major markets in swift succession. I would like to send a huge personal thank you to our Six Sigma Black Belt supply chain and our manufacturing teams. Partnering with our global supplier alliance, we have been able to significantly increase production to the point that we are now able to deliver cloud connected devices to meet the needs of all of our customers in the US, and we are working hard to make that the case in all 140 countries that we sell into worldwide as we move forward. Last quarter, we made a commitment to meet the global demand for connected CPAP and APAP devices with a combination of AirSense 10 and AirSense 11 by the end of calendar year 2023. As I just noted, we have already achieved that goal in our largest market. And we will be well ahead of that goal across all of our global markets. Supply chain challenges aren't completely behind us, but we have passed the nadir in supply and we see steady increases in supply ahead. Our amazing R&D teams and global supplier alliance teams have designed and validated new components. They have added new suppliers and they have worked hand in hand with existing suppliers to secure the flow of parts that we need. We're also focused on scaling our manufacturing capabilities with the world's biggest and highest output manufacturing plant on the planet in the field of respiratory medicine. That high-tech facility is now fully up and running in Tuas, Singapore. We are working country by country to secure the necessary regulatory approvals as we ramp production and delivery of the Essence 11 platform across global markets. Given this global ramp plan, we expect to remain on our location for the AirSense 11 platform for the next few quarters, with AirSense 10 covering all the difference in demand. With this combination of Air 10 and Air 11, we have the two best sleep apnea therapy platforms in the market, and we are now able to service all of our customers' needs. Our incredible growth rate of 43% in global device revenue this quarter speaks to that market leadership position of these two platforms, customers are voting with their wallets. Our mask and accessory business also continued its strong growth trajectory with 15% global growth in constant currency this quarter across our masks businesses. Mask growth is supported by both new patient growth as well as enhanced resupply programs to existing patients catalyzed by ongoing core patient demand. We have now reached the point that new patient flow is well above the levels we saw pre-COVID. In fact, March, as we just finished, March 2023 was our highest quarter ever for new patient setups in our cloud-based patient management system called AirView. Our digital health ecosystem enables and drives long-term adherence. pushing towards 90% adherence for our highest performing customers. Even as we now pass three years since the start of COVID, there continues to be sustained heightened awareness by patients of the importance of respiratory hygiene and respiratory health. This has been a major step change that has held for now 12 quarters. We consider that a permanent change at this point. In the US market, customers resupply programs including Bright tree resupply have augmented growth. In our consumer-driven markets, outreach programs and subscription programs have also driven mask replenishment rates. Patients want fresh equipment because there is less leak and more comfort for them, the person who was suffocating before this treatment. Physicians want fresh equipment because they have seen peer-reviewed, published evidence that patient resupply is directly correlated to increased patient therapy adherence. Our teams continue to work incredibly hard to achieve these double digit growth results amid a challenging industry environment. All 10,000 of us ResMedians are laser focused on continuing to deliver both the devices and masks for our customers globally every week, every month, and every quarter. Let's now briefly review updates on the top three strategic priorities for our company. Number one, to grow, expand the reach of, and differentiate our core sleep apnea and respiratory care businesses. Number two, to design, develop, and deliver market leading devices as well as market leading digital health solutions that can be scaled globally. And number three, to create, innovate, and grow the world's best software solutions for care delivered outside the hospital. The launch of and market reaction to our AirSense 11 device platform continues to go very well. Patient feedback remains very positive and we continue to see strong adoption of our MyAir patient app. In fact, Air 11 adoption rates of MyAir are more than double the adoption rate of MyAir with the AirSense 10 platform. It turns out that patients love getting their own data every day on their MyAir app with a daily score, daily coaching, therapy engagement through advanced analytics, and patient-focused algorithms. Patient utilization of a digital health platform like MyAir is directly linked to adherence. which is then directly linked to better patient outcomes as seen by the physician, which ultimately drives better outcomes for the payer and the provider. Given these trends, increasing production and global availability of the AirSense 11 platform clearly remains a top priority and an obligation, and we will continue to drive market penetration, leading the market, expanding the market as we scale production and achieve regulatory approvals country by country. Meanwhile, we continue to improve the software and digital health technology that drives a significant component of the value proposition for our connected devices. Over the next several quarters, we will introduce several artificial intelligence-driven coaching features into the AirView system, as well as on the patient-facing MyAir app. These AI algorithms will provide personalized suggestions to improve the patient experience and ultimately to increase patient therapy adherence. Many of these AI-driven solutions will be available on both the AirSense 10 and the AirSense 11 ecosystems. ResMed's AirSense 11 device is the best positive airway pressure device on the planet, followed very closely by the second best device, which is the AirSense 10 platform. And together, they share the same digital health technology ecosystems. We will continue to invest in the ecosystem, supporting these platforms as we innovate solutions for the benefit of physicians, providers, and especially patients. The bottom line is that our digital health technology investments have a multiplier effect across both Air 10 and Air 11 ecosystems, catalyzed and powered by AirView and MyAir. Pivoting to our respiratory care business, We continue to drive growth and adoption of our bi-level and other non-invasive ventilator solutions around the world, as well as investing in our newer-to-market technologies for patients including neuromuscular disease, COPD, and asthma, and beyond. During the quarter, we announced a pilot collaboration between our digital therapeutics team under the Propeller Health brand and the University of California Davis Health System. This partnership allows eligible UC Davis Health patients to have access to Propeller's digital therapeutics platform, including sensors for inhaled medications, a mobile app, a web portal, as well as ongoing patient support. Data from the Propeller sensors will be transmitted to the UC Davis Health's electronic health record system through an API to support patient enrollment and remote patient monitoring. It's still early days for this technology. However, combined with our investments in clinical research for home-based high-flow therapy for the treatment of COPD in the home, we see these technology innovations as important clinical additions for treating respiratory disease and an integral part of our 2025 growth strategy as we now pivot to look beyond to ResMed 2030. Turning to our software as a service offerings for care delivered outside the hospital, our SAS business grew strongly at 35% year over year in the quarter, including the contribution from our recently acquired Medifox Dahn team in Germany. On an organic basis, SAS growth in the quarter achieved high single-digit growth of 9% across our SAS portfolio. We're excited about the strong, sustainable growth of our core SAS business, And we are very pleased to see Medifox Darn contributing to our growth in its first full quarter as part of the global ResMed group. We continue to grow with customers that deliver care outside the hospital as they increase utilization of our software and data solutions to improve and optimize business efficiencies and patient care. Here at ResMed, we believe the future of healthcare is in lower cost, lower acuity settings. We are investing in technology that our customers need to operate and scale as patient volumes grow in these facilities and out of hospital facilities. As the post-COVID patient census continues to improve in our facilities verticals, we are seeing pent-up demand for technology investments that continue to come to market across skilled nursing facilities, nursing homes and beyond. Our home medical equipment SaaS business under the Bright Tree brand continues to grow at a very rapid pace and deliver sustained profitable growth. We are seeing the ongoing impacts of staffing shortages across all of the outside hospital healthcare verticals that we serve. This pressure on our customers provides opportunities to drive conversations about the benefits of our software solutions to streamline and drive efficiencies across their businesses so that they can free up staff to focus on their core purpose of serving patients and improving patient outcomes. Our SAS business remains an important part of ResMed's growth strategy, and it complements the market-leading software and device solutions that we have in our core sleep apnea and respiratory care businesses. Our Bright Tree resupply program continues to demonstrate the synergies we can generate between our SAS business and our core SRC business. Bright Tree Resupply automates the entire process from contacting the patient, interacting with the payer on coverage, communicating directly with the patient, collecting co-pays, and managing the logistics and distribution process of product. The ultimate goal is to keep a CPAP, APAP, or bi-level therapy user replenished with the supplies that they need to enable a better and longer lasting therapy experience. This results in better outcomes for the patient, the physician, the provider, and the payer. We are well positioned as the leading global strategic provider of SAS solutions for outside hospital care globally, and we have created differentiated value for our customers and long-term sustainable growth for our stakeholders. We are transforming out-of-hospital healthcare at scale, leading the market in digital health technology across our business. We now have over 14.5 billion nights of medical data in the cloud. And we have over 20.5, 100% cloud connectable medical devices on bedside tables in 140 countries worldwide. We are liberating data to the cloud every day and unlocking value for patients, for providers, for physicians, for payers, and entire healthcare systems. We are leading the industry and we won't stop innovating. We're investing 7% of our revenue in R&D. It's worth noting that the annualized revenue pool is now well north of $4 billion. There is so much opportunity ahead of us. It's inspiring and it's exciting. ResMed's mission remains crystal clear. We have a goal to improve 250 million lives through better healthcare in 2025. This patient-centric mission drives and motivates ResMedians every day, We made excellent progress towards that inspiring goal with our growth over the last 90 days. And during the last 12 months, we have improved over 156 million lives with the delivery of a device platform to a patient or a full mask system to a patient or a digital health software solution that directly impacts a patient, helping each person to sleep better, to breathe better, and to live a high-quality life with healthcare delivered right where they live. Let me close my remarks with my sincere gratitude to the more than 10,000 ResMedians working across 140 countries for their perseverance, their hard work, and their dedication today and every day. Thank you. With that, I'll hand the call over to Brett in Sydney for his remarks and then get in the queue because we will open up for Q&A from the group. Brett, over to you.