ResMed Inc. (RMD) Earnings Call Transcript & Summary

Good afternoon and good morning, ladies and gentlemen. Thank you for joining us today. My name is Amy Wakeham, ResMed's Vice President of Corporate Communications and Investor Relations. Welcome to ResMed's 2021 Annual Stockholders Meeting. To provide expanded stockholder access and participation and in the best interest of health and safety, we are conducting this year's annual meeting in a virtual-only format. During the meeting, the online polls will be open for voting by anyone who has registered on the portal and wishes to vote online with respect to any of the 3 proposals. Instructions for online registration can be found in your proxy materials. While the meeting is virtual only, we do welcome questions from our stockholders. We will answer questions from stockholders who have registered via the virtual meeting portal. If you are registered on the portal, you will have opportunities to ask questions related to the proposals when each specific proposal is taken up. If you have difficulty registering, please e-mail us at [email protected]. We will close the polls at the end of the discussion of our 3 proposals. We will also have a general Q&A portion of the meeting where other questions can be asked. I would like to call your attention to the rules of conduct for the meeting. They can be found at the link located at the bottom of the Virtual Annual Meeting screen. I will now turn the meeting over to our host, Dr. Peter Farrell.

Thank you, Amy. Good afternoon and good morning, ladies and gentlemen, and welcome to ResMed's Annual General Meeting. I'm Peter Farrell, Non-Executive Chair of the ResMed Board. Before we begin, I'd like to take a moment to introduce our directors and officers who are on the line for the virtual meeting today. Let me start with the 5 continuing directors who are candidates for reelection. Karen Drexler, who is a member of our Compensation and Nominating and Governance Committees; Mick Farrell, Chief Executive Officer; I'm Chair of the Board as mentioned; Harjit Gill is a member of our compensation of Compensation and Audit Committees; and Ron Taylor, is the Chair of our Nominating and Governance Committee, a member of our Audit and Compliance Oversight Committee and our Lead Director. In addition to these continuing directors, we have 2 newly nominated candidates for election to our Board. John Hernandez, who's Clinical Director and Head of Clinical Research, Health Economics and Outcomes Research at Google. If elected, we expect to appoint John to our Compliance Oversight Committee. And Desney Tan is Vice President for Research and incubation within Microsoft's Health and Life Science program. If elected, we expect to appoint Desney to our Compensation Committee. And finally, ResMed has 3 other members of the Board of Directors who are continuing in office but not up for reelection this year. Carol Burt, Chair of the Audit and Compliance Oversight Committee and also a member of our Nominating Governance Committee; and Jan De Witte, a member of the Audit and Compliance Oversight Committees; and finally, Rich Sulpizio, Chair of our Compensation Committee and a member of our Nominating and Governance and Audit Committees as well. Ron, Mick and I will be on the speaker's line today. Next, let me introduce the 3 other ResMed officers present with us on the speaker's line today. Rob Douglas, who's our President and Chief Operating Officer; David Pendarvis, our Chief Admin Officer, Global General Counsel and Secretary; and Brett Sandercock, our Chief Financial Officer. Ryan Evans and [ Viani Coronado ] from KPMG, ResMed's independent registered public accounting firm, are available on the speaker's line. For the administration of this meeting, Dave Pendarvis will act as Secretary of the meeting; and Jim Alden from American Election Services, LLC, will act as Inspector of Elections. The 2021 Annual General Meeting of Stockholders of ResMed Inc. will now come to order. We will begin with the formal part of the meeting, which consists of items 1 to 3 on the agenda circulated in the notice of meeting and proxy statement. After the final part of the meeting -- sorry, the formal part of the meeting. Nick will give a brief presentation and then open the virtual meeting to general questions. We will announce the preliminary results of the voting before the end of the meeting after all items have been voted upon. I will now ask Mr. Pendarvis to report on the mailing of the Notice of Meeting and notice -- and access to proxy materials and advise if there is a quorum present so that we may begin.

Thank you, Dr. Farrell. The notice of Internet availability of proxy materials for the meeting was mailed on or about October 6, 2021, to all stockholders of record as of September 21, 2021. Represented at this meeting in person, online or by proxy are 117,024,014 shares of common stock, and those represent approximately 80.3% of the shares that are outstanding and entitled to vote.

Thank you, Dave. A quorum is present, and we may now carry out the official business of the meeting. The time is 2:05 and that's San Diego time, and the polls are now open for each matter to be voted upon, as Amy described at the outset. The first item of business is the election of 7 directors. The Board of Directors has nominated Karen Drexler, Mick Farrell, Peter Farrell, Harjit Gill, Ron Taylor, John Hernandez and Desney Tan, to serve as directors of ResMed until the 2022 Annual Meeting. Because no other persons have been properly nominated in accordance with the bylaws of ResMed, nominations are now closed. Is there any discussion with respect to the nominations for directors?

No questions have been submitted.

Okay. The second item of business is to ratify the appointment of KPMG LLP as ResMed's independent registered public and coming firm for the fiscal year ending June 30, 2022. Is there any discussion about KPMG's appointment.

Dr. Farrell, no questions have been submitted.

Thank you, Amy. The third and final item of business is to approve on an advisory basis, the compensation paid to our named executive officers as disclosed in the proxy. Is there any discussion on this topic?

No questions have been submitted.

Okay. Thank you again, Amy. These are the only proposals for today's proposals for today's meeting. The time is 2:07 almost, San Diego time, on November 18, and the polls are now closed for the meeting. The Inspector of Elections has completed preliminary vote tabulations. So will the secretary please report on these voting results.

Thank you, Dr. Farrell. The preliminary results are as follows: Karen Drexler, Mick Farrell, Peter Farrell, Harjit Gill, Ron Taylor, John Hernandez and Desney Tan are all elected as directors. The appointment of KPMG LLP as our independent registered public accounting firm is ratified. The proposal to approve on an advisory basis, the compensation paid to our named executive officers as disclosed in the proxy statement is approved. The final result and the voting details will be reported in the filing that we will make in the next few days with the U.S. Securities and Exchange Commission, and that filing will also be available on our website, resmed.com.

Thank you, David. This concludes the formal portion of the meeting, and I declare the meeting adjourned. Now that the formal business has been transacted, Mick will take a few moments to update you on ResMed's progress this past year and include some of our plans for future growth. So over to Mick.

Great. Well, thank you, and thank you to the shareholders who are joining us on this call. And I'm sure many of you have seen our Investor Day, which is posted on investor.resmed.com. A whole bunch of ResMedian executives present in detail. This will be a very high-level summary. First slide is just our financial forward-looking statements that's available on investor.resmed.com. Next slide, please, Amy. So this slide talks to our ResMed 2025 strategy, and I won't go for every line on it. But in the last 12 months, ResMed passed $3.2 billion in annual revenue. We're sitting at around $38 billion in market cap. But the most important metric that we care about here in the company is that 130 million lives were changed. We have 15 million CPAPs, APAPs bilevels, ventilators and full market systems that have been provided around the world. And we have over 115 million patients whose lives will change with digital health solutions these last 12 months. We've helped those people sleep better, breathe better and live happier, high-quality lives outside the hospital. This slide talks to the number of patients that are on some of our digital health solutions. The bottom right-hand corner talks to 4-plus million patients who have signed up to myAir to daily get feedback on their sleep apnea therapy. We're seeing the pickup rate of that on our latest launch platform, the AirSense 11 and over 60% of patients signing up to that digital health solution. And we think that has a great acceleration on our history and a really great opportunity to lower the health care system costs, lowering labor costs for setting up patients by 50% and improving adherence rates based on AirView published events up to north of 87% adherence, which is best in the industry, best in class. Next slide, please, Amy. This slide provides an overview of our digital health cloud, combining all the sort of artificial intelligence machine learning capabilities we have. But what it's really about is unlocking value, unlocking value for patients through patient outcomes, for businesses through greater efficiency and lower costs and for operations and making sure that they're all synchronized. The next slide covers our financials. These are retrospective data showing really good solid double-digit growth on the top line, 12% plus CAGR on revenue and leverage through our bottom line with non-GAAP operating income up 17% non-GAAP EPS, up 15%. The total shareholder return is really strong on a 1-year basis at 55%, but also triple-digit return on 3 years and 5 years. We look on this as good, but that's the history. What we're excited about is the future and our goal towards 2025. Going to the last slide is to improve over 250 million lives in the year 2025. That really strong double-digit volume growth from our 130 million lives changed these last 12 months, but we think we have the strategy, the culture of the team and the opportunity to do it over the coming 4-plus fiscal years as we enter fiscal 2022. So with that brief overview of ResMed and I truly encourage you to meet and see the executives that help put this strategy and action on our Investor Day that's available on investor.resmed.com. We will now entertain any questions that shareholders on the call may have. But before we take questions, let me remind you that answers to questions may contain forward-looking statements. Our actual results may differ materially from these statements and are subject to risks and uncertainties detailed in our most recent annual quarterly reports filed with the SEC. Amy, are there any questions through the virtual portal there?

Mick, there are no submitted questions.

Well, fantastic, Amy. Thank you. That concludes our meeting, and thank you all to the Board and all the shareholders who have joined us for coming today, and we will talk to you on this format in 12 months and see you in less than 90 days for our next investor call. Thank you.

This now concludes the meeting. Thank you for joining, and have a pleasant day.