ResMed Inc. Morgan Stanley 24th Annual Global Healthcare Conference

We are a growth story. What we are seeing in the market is very strong and steady growth. We talked about in our earnings call a couple of weeks ago, and we actually gave guidance for the first time. We have listened to you, our investors, and you asked for that, and we talked about 5%-7% growth across the business, including removal of $75 million for Astral. If you added that back in, that would imply a sort of organic growth. It was around 130 basis points of Astral, that $75 million. It would be 6.3%-8.3% growth guidance on the top line. We also gave bottom-line guidance that implies some pretty strong leverage through the P&L down to EPS in the low double digits.

Yeah, when we think about growth, we think about patients, right? What is our total addressable market? It is 1 billion people worldwide who suffocate every night. That is the prevalence of our core obstructive sleep apnea market. We also add on 800 million who have insomnia, and we add on 400 million now who have restless legs syndrome. We will talk later about M&A, but we acquired Noctrix, a company that makes the world-leading restless legs syndrome treatment, non-invasive, completely reversible, drug-free therapy as well. The other part of our TAM is 480 million of chronic obstructive pulmonary disease patients. You add that all together, that is 2.7 billion people worldwide who have a sleep health or breathing health disorder and need our solutions, our healthcare technology at home solutions.

With that as our TAM, our goal is to, that is 1 in 4 people on the planet, to continue to grow steadily. We have talked about growth of devices, America's sleep devices in the mid-single digits, and growth of the masks and accessories and other part of our business in the high single digits. Our goal is to meet and beat that every quarter through demand gen, demand capture, demand curation. There are some pretty big mega trends that are actually supporting growth, to your question around growth, from Big Pharma bringing people into primary care like never before for the GLP-1s. They are coming into PCPs, and we are educating those PCPs on if they have obstructive sleep apnea, you have to write a script for the gold standard, which is CPAP, APAP, and bilevel therapy. We are seeing that come through.

The other big trend on growth is consumer tech. We talked 2 years ago here at this conference, I think, about Apple just came out with sleep apnea detection on their Apple Watch 2 years ago, following Samsung on their Galaxy Watch. The rumor is that Samsung's Galaxy Ring will have sleep apnea detection before the end of this calendar year. We have formed a strategic alliance with Oura, who is a major player in the wearable space on the ring side. Before their IPO, I think in their S1 document, ResMed was mentioned as a partner around sleep health. Growth is strong. Mid-single digits on America's devices, high single digits on America's masks and other, and pretty strong growth in rest of world as well.

Yeah, no, it is a really good question, David, because we think about the whole sort of value chain from sleep concerned consumer, part of that 2.7 billion total addressable market, all the way through to screening, diagnosis, treatment, management, and being on therapy for life, which is where ResMed focuses our time. To your point, this is not just us going out there and advocating for work. We have done some internal development work, but also some acquisitions. I will talk about three of them. We acquired a company called Ectosense, and they make a fingertip-sized home sleep apnea test called NightOwl. It just fits around your finger, think like a Band-Aid size around it, Bluetooth to your phone, and the data go to the cloud and go to the sleep doctor. So Ectosense and the product NightOwl.

We also made an acquisition of a company called Somnoware, which is software for the pulmonary physician to have seamless workflows for them. The third acquisition or partnership that we created is to understand that whole value chain and put all the part pieces together is tying into our Brightree model and tying into our overall ecosystem and creating a smooth pathway for the patients. As we see those acquisitions happen, we have actually got to form partnerships and understand the channel better. I talked earlier about primary care physicians seeing a whole lot more patients coming in. We are now educating, and we have had interactions with 95,000 primary care physician continuous medical educational CME episodes with 55,000 unique clinicians. Most of them are primary care physicians.

That is re-educating, if you like, those people around gold standard treatment, writing prescriptions for CPAP, but making it really easy. How do you make it easy? That leads to the third acquisition. We bought a company called VirtuOx, which runs a home sleep apnea testing protocol. The goal there is to create the Amazon one-click for that primary care physician because they are dealing with everything from headaches to tinea, head to toe. When they identify sleep apnea, they need the one click. With VirtuOx, we have that. They can refer them to the number one home sleep apnea testing protocol, which is VirtuOx. They can get screened, diagnosed, get an independent diagnostic and testing facility approach with the numbers. If it is positive, they can refer to a board-certified sleep doctor within that state to write a prescription. It can be virtual or in-person.

Then the patient can be sent to an HME and be taken care of. As you think about that demand generation from big pharma or big tech that I talked about earlier, our job is to do the curation and conversion all the way to a prescription for gold standard therapy, CPAP, APAP, bilevel, then making sure they get to a good DME that can get them on therapy. Our goal then is to keep them on therapy for life and make sure they have masks and accessories and are well taken care of.

I think just adding onto that, two of the biggest growth opportunities I see for ResMed over the next mid to long term is, one is that middle of the funnel. Mick just talked about all these new patients that are coming in, whether it is through primary care, through the consumer tech companies. How do we help convert them and partner with our HME partners in a country like the U.S. here. But making it more of a consumer-like experience, like the Apple, the Amazon experience that Mick talked about, that makes it easy for that patient to be able to go on and start and then stay on therapy. The second big thing is we have got millions of people around the world that are loyal ResMed users every single night helping them sleep.

How do we make sure that we're getting them the latest up-to-date masks when they need it every couple of months? The latest up-to-date devices. We've had AirSense 11 now in market for over 5 years. How do we make sure all the patients around the world who are eligible can get an AirSense 11? Eventually when we launch our new platform as well. How do we just make sure that all of the loyal users that are using our devices are taking advantage of all the opportunities for them to use it as often as possible?