Latest / Vanguards of Healthcare by Bloomberg Intelligence / Resmed’s Expanding Within Sleep Health

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Resmed’s Expanding Within Sleep Health · Vanguards of Healthcare by Bloomberg Intelligence

• 0:17
  Speaker 1: Welcome to another episode of the Vanguards of Healthcare series.
• 0:20
  Speaker 1: My name is Matt Henriksen, the Medical Technology Analyst at
• 0:23
  Speaker 1: Bloomberg Intelligence, which is the in-house equity research platform of
• 0:26
  Speaker 1: Bloomberg LP. We are pleased to have back with us
• 0:29
  Speaker 1: Mick Farrell, CEO of ResMed, a medical device company that
• 0:33
  Speaker 1: is driving the sleep health market. You can dive deeper
• 0:37
  Speaker 1: into the company and its financials by typing in RMDEQUITYGO
• 0:42
  Speaker 1: on your Bloomberg terminal.
• 0:43
  Speaker 2: Mick, welcome back.
• 0:44
  Speaker 3: I'm happy to be back here, Matt. And to be
• 0:47
  Speaker 3: live and in person here in New York makes such
• 0:50
  Speaker 3: a difference. Last time was during the middle of COVID pandemic.
• 0:53
  Speaker 3: It was 2022 or 23, I think. And we were both, well,
• 0:57
  Speaker 3: I was at least remote in my home office. But no,
• 0:59
  Speaker 3: great to be with you live here in the studio.
• 1:01
  Speaker 1: I always tell listeners and guests that the remote recording...
• 1:05
  Speaker 1: It's a great episode, but just the in-person is always
• 1:08
  Speaker 1: just a better, better interaction and everything.
• 1:10
  Speaker 2: Yeah.
• 1:11
  Speaker 1: But, you know, going back through ResMed, going through some
• 1:14
  Speaker 1: of the transcripts that you talked about, you mentioned several
• 1:17
  Speaker 1: times triumvirate of health. And for those listeners who are
• 1:24
  Speaker 1: new to the ResMed story, what is the triumvirate of
• 1:27
  Speaker 1: health and how does ResMed play within that triangle?
• 1:31
  Speaker 3: Yeah, so the triumvirate of health is a term coined
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  Speaker 3: by Professor Bill Dement at Stanford. Actually, may he rest
• 1:40
  Speaker 3: in peace in heaven. He's passed now. But Bill Dement
• 1:43
  Speaker 3: is often known as the grandfather of sleep medicine. And
• 1:47
  Speaker 3: he started sleep medicine at Stanford and had done much
• 1:53
  Speaker 3: of his medical education at the University of Chicago, where
• 1:55
  Speaker 3: a lot of the original sleep medicine happened. Um, and
• 1:59
  Speaker 3: this was in the seventies and he was really trying to,
• 2:02
  Speaker 3: to show how important sleep health was. And so he
• 2:05
  Speaker 3: called it the triumvirate of health, which includes three aspects. Uh,
• 2:09
  Speaker 3: number one is diet and nutrition. Number two is cardiovascular exercise.
• 2:16
  Speaker 3: And number three is sleep health. And, you know, it's
• 2:20
  Speaker 3: interesting because back then in the seventies, sleep health wasn't
• 2:23
  Speaker 3: seen as important. There was, you know, a lot of, um,
• 2:27
  Speaker 3: focus on diet and nutrition in the 80s and then
• 2:31
  Speaker 3: cardiovascular exercise in the 80s and 90s. But I look
• 2:35
  Speaker 3: now where we are in 2026 and I look at
• 2:40
  Speaker 3: these Apple watches that are tracking your sleep, the Samsung
• 2:44
  Speaker 3: Galaxy Watch tracking your sleep, a Whoop, a Garmin, an
• 2:48
  Speaker 3: Aura Ring. They're all tracking sleep health. And we at
• 2:53
  Speaker 3: ResMed actually did a global sleep survey every year, and
• 2:58
  Speaker 3: we did our global sleep survey this year, 2026, and
• 3:00
  Speaker 3: we found that sleep health was actually ranked above cardiovascular
• 3:06
  Speaker 3: exercise and above diet and nutrition for most people, which
• 3:11
  Speaker 3: is incredible how it's all changed. But Bill DeMint started
• 3:15
  Speaker 3: this all out five, six decades ago, and now we're
• 3:20
  Speaker 3: sitting there saying, well, what are we doing with this
• 3:22
  Speaker 3: sleep health? How do we turn it from Oh, I'm
• 3:25
  Speaker 3: monitoring my sleep. Did I get enough REM sleep, slow-wave sleep,
• 3:28
  Speaker 3: enough hours of sleep, the right temperature, the right lighting,
• 3:32
  Speaker 3: the right comfort in my bedroom? Am I really focused
• 3:36
  Speaker 3: on balancing those three? Making sure I get cardiovascular exercise,
• 3:42
  Speaker 3: which helps you sleep. Making sure I eat the right
• 3:44
  Speaker 3: things and eat the right amount of the right things.
• 3:48
  Speaker 3: So yeah, a lot to dig into here, man.
• 3:50
  Speaker 1: I was about to say, you know, you talked about
• 3:52
  Speaker 1: the survey and you talk about how those patients, you know,
• 3:56
  Speaker 1: sleep health is so important for them. And, you know,
• 3:58
  Speaker 1: the fact that we, there are the Oura rings and
• 4:00
  Speaker 1: the whoops and the Garmin watches and all Apple watches,
• 4:04
  Speaker 1: everything like that. But it seems like still the sleep
• 4:07
  Speaker 1: health market within the medical device sector is underappreciated compared
• 4:13
  Speaker 1: to cardiovascular health. I mean, all the headlines that I
• 4:15
  Speaker 1: have for my, you know, equity research side is all
• 4:19
  Speaker 1: about PFA, electrophysiology. It's the TAVR and mitral valves. It's
• 4:24
  Speaker 1: all cardiovascular focus. But the sleep health just hasn't gotten
• 4:29
  Speaker 1: that same spotlight. So how do you see building that
• 4:35
  Speaker 1: awareness for these, you know, for these patients? Because for me,
• 4:40
  Speaker 1: I see a good night's sleep. I feel better the
• 4:43
  Speaker 1: next day. I can imagine that the long-term effects of
• 4:46
  Speaker 1: that is very important as well.
• 4:48
  Speaker 3: Yeah, look, I think it is, Matt. And look, it's
• 4:52
  Speaker 3: not random that cardiovascular disease is seen as so important.
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  Speaker 3: It's the number one killer in the world is heart
• 5:01
  Speaker 3: attack and stroke. And cancer is right up there too, right,
• 5:05
  Speaker 3: with all the biotech companies doing research on the various
• 5:08
  Speaker 3: cancers and how to cure them. I think the underappreciated
• 5:12
  Speaker 3: part around sleep health is that it actually relates to
• 5:15
  Speaker 3: all of the above. So if you're suffocating with sleep apnea,
• 5:21
  Speaker 3: because I don't call it sleep apnea. Apnea is Greek
• 5:25
  Speaker 3: for without breath, apnea. And so I don't know how
• 5:28
  Speaker 3: many of your listeners have Greek or ancient Greek as
• 5:32
  Speaker 3: part of their repertoire, but sleep apnea is a beautiful
• 5:37
  Speaker 3: medical term, but sleep suffocation is the reality. If you're
• 5:40
  Speaker 3: having sleep suffocation multiple times per hour all night, you
• 5:46
  Speaker 3: wake up unrefreshed and you might actually crash your car
• 5:51
  Speaker 3: or get fired from your job or lose your marriage.
• 5:55
  Speaker 3: But you actually have a higher probability of having a
• 5:58
  Speaker 3: heart attack, higher probability of having a stroke, higher probability
• 6:02
  Speaker 3: of having six times higher of a solid cell tumor cancer.
• 6:07
  Speaker 3: And some of the latest research is actually that the hypoxia,
• 6:11
  Speaker 3: the repetitive hypoxia that comes from sleep apnea can lead
• 6:16
  Speaker 3: to higher rates of dementia, Alzheimer's, and specifically we've got
• 6:21
  Speaker 3: peer-reviewed published evidence around Parkinson's disease. And so as we
• 6:26
  Speaker 3: talk about sleep health, I don't try to underplay the
• 6:28
  Speaker 3: importance of cardiovascular disease or stroke or neurological diseases or diabetes.
• 6:33
  Speaker 3: I say yes and yes. These are both hugely important parts.
• 6:40
  Speaker 3: And I almost think of cardiovascular disease, diabetes, and these
• 6:44
  Speaker 3: other areas as verticals. Sleep is a horizontal, and it
• 6:49
  Speaker 3: can impact all of the above. And so I love
• 6:52
  Speaker 3: that the world has caught up to the importance of
• 6:55
  Speaker 3: good sleep. And now for us at ResMed, the world
• 6:59
  Speaker 3: leader in treating sleep apnea, we have 30 million people 100%
• 7:04
  Speaker 3: cloud connectable medical devices that we've sold in over 140 countries.
• 7:09
  Speaker 3: We have over 28 billion nights of medical data in
• 7:13
  Speaker 3: the cloud. And so our challenge now is to say, Matt,
• 7:17
  Speaker 3: how do we take this huge amount of data that's
• 7:20
  Speaker 3: been liberated to the cloud and turn it into actionable
• 7:24
  Speaker 3: information for a patient, for a physician, for a healthcare provider,
• 7:29
  Speaker 3: or maybe for a whole healthcare system to say, Let's
• 7:32
  Speaker 3: get peer-reviewed, published evidence to show all these interactions with
• 7:36
  Speaker 3: these comorbidities of the obstructive sleep apnea. But then more importantly,
• 7:41
  Speaker 3: what are we going to do about it? How do
• 7:43
  Speaker 3: we make sure that sleep apnea care gets to the
• 7:46
  Speaker 3: 1 billion people worldwide who have it, not the 5, 10, 15%
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  Speaker 3: who are currently being screened, diagnosed, and treated? How do
• 7:55
  Speaker 3: we get to the 85% who are out there? And
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  Speaker 3: now is our moment. I think sleep health is having
• 8:02
  Speaker 3: a moment. And within that, sleep apnea has to be
• 8:06
  Speaker 3: the primary focus. But RestMed is also into insomnia. And
• 8:10
  Speaker 3: we're also into restless legs syndrome. And we're also into
• 8:14
  Speaker 3: chronic obstructive pulmonary disease. So if you add the prevalence
• 8:20
  Speaker 3: of these four areas, a billion people with sleep apnea,
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  Speaker 3: 800 million worldwide with insomnia, 400 million worldwide with restless
• 8:30
  Speaker 3: leg syndrome and around 480 million with chronic obstructive pulmonary disease.
• 8:35
  Speaker 3: That's 2.7 billion people. That's one in four people on
• 8:39
  Speaker 3: the planet. So yes, this is an important area. And
• 8:43
  Speaker 3: ResMed is the world leader in this, has to get
• 8:46
  Speaker 3: the word out. And that's why I'm here doing your podcast.
• 8:48
  Speaker 3: But then we have to have practical solutions, leveraging all
• 8:52
  Speaker 3: the technology of the day to say, how do we
• 8:54
  Speaker 3: help people find out if they have a sleep health
• 8:56
  Speaker 3: or breathing health issue? get them screened, diagnosed, and treated.
• 9:00
  Speaker 3: And with where AI is going right now, we can
• 9:04
  Speaker 3: do a lot with these data.
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  Speaker 1: Yeah, and let's jump into the offering that ResMed provides
• 9:09
  Speaker 1: to those patients because what's interesting is you're expanding from
• 9:14
  Speaker 1: just the devices themselves.
• 9:17
  Speaker 2: So I'm thinking sleep apnea.
• 9:18
  Speaker 1: I'm thinking about the mask that I'm wearing over my face.
• 9:22
  Speaker 1: Then you have the device that creates the airflow going through.
• 9:26
  Speaker 1: but you mentioned the connected care.
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  Speaker 3: Yeah.
• 9:29
  Speaker 2: What did you see as you.
• 9:31
  Speaker 1: Were building out this platform and saying, okay, we're not
• 9:35
  Speaker 1: just a device company, we're this connected care company?
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  Speaker 3: Yeah, it's been a really interesting evolution, Matt. I mean,
• 9:42
  Speaker 3: if you think about it, it was 2014 when ResMed
• 9:45
  Speaker 3: was the first company on the planet to say, we're
• 9:49
  Speaker 3: going to put 100% cloud connectivity into every medical device.
• 9:53
  Speaker 2: That we make. And cloud connectivity wasn't a big term
• 9:56
  Speaker 2: back then.
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  Speaker 4: No, no.
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  Speaker 3: I remember going on Jim Cramer's, you know, CNBC, Jim
• 10:01
  Speaker 3: Cramer's Mad Money, and they had all these big clouds
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  Speaker 3: behind me. It was like, you know, MedTech in the cloud.
• 10:08
  Speaker 3: And I think it was 2014, 2015, somewhere around there.
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  Speaker 3: And he was sort of not making fun of it,
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  Speaker 3: but sort of saying, well, you know, Is your cloud
• 10:18
  Speaker 3: better than your competitor's cloud, right? That was his actual question.
• 10:21
  Speaker 3: And I was like, it's not about whose cloud is better.
• 10:24
  Speaker 3: It's about what you do for that individual patient, for
• 10:26
  Speaker 3: that individual physician, for that provider, what you do in
• 10:29
  Speaker 3: population health management. But that's a long journey, if you think, right?
• 10:33
  Speaker 3: 12 years of 100% cloud connectable medical devices being sold,
• 10:38
  Speaker 3: 30 million now out in the market, 28 billion nights
• 10:41
  Speaker 3: of medical data. But no, the whole purpose of having
• 10:45
  Speaker 3: a connected healthcare ecosystem is to liberate the data and
• 10:50
  Speaker 3: then unlock value. For instance, to the patient, let's start there, right?
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  Speaker 3: The most important person in the healthcare ecosystem is that person,
• 10:59
  Speaker 3: that patient. And so, yeah, we've got 30 million of
• 11:04
  Speaker 3: them with cloud-connectable medical devices. We've got 10 million that
• 11:07
  Speaker 3: have downloaded an app called MyAir, and they're able to
• 11:11
  Speaker 3: see exactly how they slept every night. When they wake up,
• 11:16
  Speaker 3: they're able to see it. They can look longitudinally over
• 11:18
  Speaker 3: seven days, 30 days and beyond. But just checking in
• 11:21
  Speaker 3: to say, oh, did I get a score out of 100?
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  Speaker 3: Like that simple Maya score every morning. It's as addictive,
• 11:29
  Speaker 3: but in a good way as social media. People get
• 11:32
  Speaker 3: addicted to social media and get sold ads by these
• 11:35
  Speaker 3: large consumer tech companies because they turn the person into
• 11:38
  Speaker 3: the product.
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  Speaker 2: We don't.
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  Speaker 3: We engage you. What we find is that when a
• 11:44
  Speaker 3: patient is using MyAir and the doctor's using AirView, and
• 11:48
  Speaker 3: then the cloud connected device is there, we're able to
• 11:51
  Speaker 3: get up to 87% adherence at day 90 for that patient, right?
• 11:57
  Speaker 3: It's about 27 percentage points higher than if we didn't
• 12:02
  Speaker 3: have the cloud connectivity. So when I get asked, you know,
• 12:04
  Speaker 3: what was this decade? Why did you do it? Is
• 12:06
  Speaker 3: it just because you wanted to be ahead of the
• 12:07
  Speaker 3: curve and be on tech? And Yes, we did. I mean,
• 12:10
  Speaker 3: we are the most innovative medtech company in the field
• 12:13
  Speaker 3: of respiratory medicine, and we always will be. But we
• 12:18
  Speaker 3: did it to unlock value. And that value of driving
• 12:22
  Speaker 3: more patients to use therapy has huge outcomes in reducing
• 12:26
  Speaker 3: heart attacks, reducing strokes, reducing solid cell tumor cancer, and
• 12:29
  Speaker 3: now reducing the incidence of mental health and brain health.
• 12:33
  Speaker 3: Hugely important for the healthcare system. So It was the
• 12:38
  Speaker 3: start of a journey 12 years ago. I'm really excited
• 12:41
  Speaker 3: now where AI is going right now. We're seeing this
• 12:43
  Speaker 3: exponential growth. Everyone's debating, is it a doomsday or is
• 12:49
  Speaker 3: it the start of something amazing? For us, we've been
• 12:53
  Speaker 3: investing in tech for a long time in this space.
• 12:56
  Speaker 3: We're saying, how can we apply AI? We already have
• 12:59
  Speaker 3: with 510K approved, 510K cleared AI products. How can we
• 13:05
  Speaker 3: use this great new technology and leverage all the data
• 13:08
  Speaker 3: out there to engage that person, to engage that doctor,
• 13:11
  Speaker 3: to improve healthcare outcomes, to lower costs, improve efficiency, reduce
• 13:17
  Speaker 3: friction in the system. Think of how difficult it is,
• 13:22
  Speaker 3: like the process of going and seeing a doctor and
• 13:25
  Speaker 3: working through care. Our last podcast we did virtually, a
• 13:29
  Speaker 3: lot of physician interactions should be able to happen that way,
• 13:31
  Speaker 3: not waiting and lining up and doing it. But where
• 13:34
  Speaker 3: can we use tech where it's appropriate? And where can
• 13:36
  Speaker 3: we have, like we are now, 3D humans in person
• 13:39
  Speaker 3: have a much better interaction? Because sometimes you need that
• 13:42
  Speaker 3: with your physician or your respiratory therapist. And so choosing where, how,
• 13:46
  Speaker 3: and when to have the right costs, the right level
• 13:48
  Speaker 3: of digital, the right level of in-person, and to balance
• 13:51
  Speaker 3: it out for lower costs, improved outcomes, and bending the
• 13:55
  Speaker 3: curve of these major chronic diseases that ResMed can touch.
• 13:59
  Speaker 1: Yeah, I love to just jump into that, you know,
• 14:02
  Speaker 1: the shift from SaaS to AI, all the, you know,
• 14:05
  Speaker 1: clearing up all that. Because there's a lot, it's very cloudy,
• 14:09
  Speaker 1: let's put it that way, about, you know, all the
• 14:11
  Speaker 1: definitions out there and everything.
• 14:12
  Speaker 2: But let's, I want to stay with this MyAir. Yeah.
• 14:15
  Speaker 1: Because I just made a connection of that you're MyAir,
• 14:21
  Speaker 1: they're following their sleep every night to have higher adherence rates.
• 14:24
  Speaker 1: But it just doesn't seem to be just, oh, if
• 14:26
  Speaker 1: I wear my mask, I'm doing better.
• 14:29
  Speaker 2: There's probably other things too.
• 14:30
  Speaker 1: I'm thinking like if I go to a steakhouse for
• 14:32
  Speaker 1: dinner and I get that, if I get that ribeye
• 14:35
  Speaker 1: and I have that second glass of wine, I'm not
• 14:38
  Speaker 1: going to sleep well that night. You're not going to
• 14:40
  Speaker 1: know that. But it's other things too. People can make
• 14:42
  Speaker 1: the connection. Oh, I didn't sleep well this night. Maybe
• 14:45
  Speaker 1: it was something I did. I had what I had
• 14:48
  Speaker 1: for dinner. I had something too salty or I did
• 14:49
  Speaker 1: something activity wise beforehand. And it makes me think of
• 14:53
  Speaker 1: continuous glucose monitors. And I've trialed those ones out. And
• 14:58
  Speaker 1: it's interesting because it's almost like you gamify it and
• 15:01
  Speaker 1: you try to see how long you can stay within
• 15:05
  Speaker 1: the healthy range of glucose levels. And what you were
• 15:09
  Speaker 1: talking about with my ear just now and how you
• 15:11
  Speaker 1: improve that adherence rate, it kind of sounded similar to that.
• 15:14
  Speaker 1: And I'm curious if that's one of the steps that
• 15:16
  Speaker 1: make it better for their sleep health overall.
• 15:19
  Speaker 3: Yeah, no, it's a really good question. And you're actually
• 15:22
  Speaker 3: going back to the triumvirate of health right there because
• 15:24
  Speaker 3: you're talking about diet and nutrition and you mentioned even exercise. Look,
• 15:29
  Speaker 3: one great thing about MyAir is we've now at ResMed
• 15:33
  Speaker 3: been able to develop a personal relationship with these people
• 15:38
  Speaker 3: who've chosen to download an app and many of them
• 15:41
  Speaker 3: check a box saying, yeah, please do reach out to
• 15:43
  Speaker 3: me with other tips around broader sleep health. And to
• 15:48
  Speaker 3: your point, you know, we've been able to show the
• 15:51
  Speaker 3: importance of, you know, we both have water in front
• 15:53
  Speaker 3: of us here as we're doing this podcast. drinking five
• 15:57
  Speaker 3: plus bottles of water equivalent, large glasses of water a day,
• 16:03
  Speaker 3: actually drives to better sleep outcomes. Who would have thought, right?
• 16:07
  Speaker 3: Drinking more water makes you sleep better. Well, of course
• 16:10
  Speaker 3: it does. Humans are composed of lots of carbon and hydrogen,
• 16:15
  Speaker 3: but water is a huge part of our composition. And
• 16:18
  Speaker 3: having the right amount of water will allow you to
• 16:21
  Speaker 3: be in that perfect subconscious state regenerative state. Hey, by
• 16:26
  Speaker 3: the way, this podcast, we can go to a little
• 16:28
  Speaker 3: bit of the nerdy scientific detail, like the importance of sleep.
• 16:32
  Speaker 3: Why do mammals sleep? We don't actually fully know. We
• 16:37
  Speaker 3: just know they do, and they sleep different amounts. Humans
• 16:41
  Speaker 3: generally sleep six, seven, or eight hours per night. Every
• 16:44
  Speaker 3: 24 hours, we take about 25% to 30% of our
• 16:48
  Speaker 3: time and go into a subconscious regenerative state. So we
• 16:52
  Speaker 3: don't know why we have to do it, but we
• 16:55
  Speaker 3: know what comes out of it. We get a regeneration
• 16:59
  Speaker 3: of our brain. Synapses that have formed stress from the
• 17:03
  Speaker 3: day before delete themselves. During REM sleep, which is this
• 17:08
  Speaker 3: rapid eye movement sleep where your body is paralyzed, your
• 17:12
  Speaker 3: brainstem actually shuts down movement of voluntary muscles so that
• 17:17
  Speaker 3: you don't act out those crazy dreams you have. And
• 17:20
  Speaker 3: those crazy dreams you have that stretch boundaries of all
• 17:23
  Speaker 3: your imagination have you wake up with new ideas.
• 17:27
  Speaker 2: Yeah.
• 17:29
  Speaker 3: You know, Archimedes fell asleep in the bath and discovered
• 17:34
  Speaker 3: the theory of displacement. Newton fell asleep under that tree
• 17:40
  Speaker 3: in Cambridge. Apple hit him on the head. Gravity. Einstein
• 17:44
  Speaker 3: was daydreaming.
• 17:46
  Speaker 2: Fell asleep.
• 17:46
  Speaker 3: Saw a span of falling. Theory of relativity. If you
• 17:50
  Speaker 3: don't get good sleep, you could have that great idea
• 17:53
  Speaker 3: of relativity, gravity, displacement. It won't come to light. And
• 17:58
  Speaker 3: so that's the brain restoration part. And then, you know,
• 18:01
  Speaker 3: you're pretty athletic here, Matt. So I bet you run
• 18:05
  Speaker 3: or you do something. Cardiovascular exercise leads to better sleep
• 18:09
  Speaker 3: outcomes the same way water does during the day. Good
• 18:12
  Speaker 3: cardiovascular exercise, the right amount, not too much, not too little.
• 18:15
  Speaker 3: 30 minutes to 60 minutes, three times to five times
• 18:19
  Speaker 3: a week. That leads to better sleep outcomes. But we're
• 18:24
  Speaker 3: actually able to show that during slow wave sleep and
• 18:27
  Speaker 3: some other restorative sleep, muscle tissue is regenerated and built upon.
• 18:32
  Speaker 3: So brain health and mental capacity and imagination can be
• 18:37
  Speaker 3: improved through good REM sleep. Literally, physical restoration can happen
• 18:42
  Speaker 3: through good slow wave sleep. So That's why it's so important.
• 18:46
  Speaker 3: And then when you suffocate or you have restless leg
• 18:49
  Speaker 3: syndrome and you're kicking yourself and your bed partner, you
• 18:52
  Speaker 3: disturb not only one person's sleep and the snoring with apnea,
• 18:55
  Speaker 3: you disturb often two person's sleep and it ends up
• 18:59
  Speaker 3: in sleep divorces and all sorts of other things. I'll
• 19:03
  Speaker 3: just close with this, which on this sleep health part,
• 19:07
  Speaker 3: the reason ResMed exists as a company is that my
• 19:11
  Speaker 3: dad was a vice president for Baxter Healthcare. in Asia Pacific,
• 19:16
  Speaker 3: and he saw this reverse vacuum cleaner, he saw this
• 19:21
  Speaker 3: glue-on mask in this experimental lab in the University of Sydney,
• 19:26
  Speaker 3: and he asked Eddie Merck, who we call patient zero,
• 19:31
  Speaker 3: he said, Eddie, why do you use this Rube Goldberg
• 19:36
  Speaker 3: contraption on your face? Why did you drill a hole
• 19:39
  Speaker 3: from the garage through to your bedroom because of the
• 19:42
  Speaker 3: noise of this thing? How could you possibly....
• 19:45
  Speaker 2: Suffer this.
• 19:47
  Speaker 3: Awful therapy and Eddie Merck said, I would do anything
• 19:53
  Speaker 3: for this therapy because it saved my job, it saved
• 19:56
  Speaker 3: my marriage, and it saved my life. This is the
• 20:00
  Speaker 3: best therapy I could possibly have. I'd do anything for it.
• 20:04
  Speaker 3: And of course, Now we make small, quiet, comfortable fabric masks, 100%
• 20:11
  Speaker 3: cloud connected, data in your phone, data in your Apple
• 20:14
  Speaker 3: Health or your Samsung Health app, your Google Health app.
• 20:18
  Speaker 3: And we just make sure that you get it how
• 20:20
  Speaker 3: you want it. And it's small, quiet, comfortable and scalable
• 20:24
  Speaker 3: across the world. Anyway, I thought it was worthwhile taking that.
• 20:26
  Speaker 2: No, I like that.
• 20:27
  Speaker 1: And I would make the connection where I know I
• 20:29
  Speaker 1: run better if I have a better night's sleep before.
• 20:32
  Speaker 1: And it's, you know, I am able to get a
• 20:35
  Speaker 1: quicker pace or I'm able to run that extra mile.
• 20:38
  Speaker 1: I feel it when I get a good night's sleep
• 20:41
  Speaker 1: in my calves. So I understand that.
• 20:43
  Speaker 2: Yeah.
• 20:44
  Speaker 1: It also seems like you're making a new triumvirate message
• 20:47
  Speaker 1: here between save job, save what?
• 20:49
  Speaker 2: Save marriage, save health. I mean, I feel like you're.
• 20:52
  Speaker 3: Well, think about it. If you're running better, aren't you
• 20:56
  Speaker 3: a better Bloomberg analyst? Aren't you better at whatever you do?
• 21:00
  Speaker 3: You know, I don't do as many exams anymore, but
• 21:03
  Speaker 3: when I was doing exams at MIT or any of
• 21:05
  Speaker 3: the schools I went to, I knew that getting to
• 21:09
  Speaker 3: bed on time, like that idea of staying up, studying
• 21:13
  Speaker 3: a lot and cramming for it, right? Maybe you had
• 21:15
  Speaker 3: to do that when you were at some parts of college, right?
• 21:18
  Speaker 3: You just didn't have the intel. But if you had
• 21:20
  Speaker 3: it there, the most important thing the night before that
• 21:22
  Speaker 3: test was to get seven, eight hours sleep, good sleep.
• 21:25
  Speaker 3: And you wake up refreshed. So save my job means
• 21:29
  Speaker 3: highest intellectual capability. Save my marriage means, yeah, that snoring
• 21:33
  Speaker 3: does end up in a sleep divorce. And by the way,
• 21:36
  Speaker 3: you're not a nice person when you haven't slept. You know,
• 21:39
  Speaker 3: it's the equivalent for people with untreated sleep apnea. It's
• 21:42
  Speaker 3: the equivalent of waking up with a hangover. Every day.
• 21:45
  Speaker 3: And they don't even know they were drinking because it
• 21:47
  Speaker 3: wasn't drinking. It was hypoxia that was getting there. And
• 21:50
  Speaker 3: saved my life. Well, now we actually, you know, when
• 21:53
  Speaker 3: Eddie said that we didn't have the data, we now
• 21:55
  Speaker 3: have the data. We can show that untreated sleep apnea
• 22:00
  Speaker 3: does lead to more heart attacks, does lead to more strokes,
• 22:04
  Speaker 3: does lead to more solid cell tumor cancer. So it
• 22:08
  Speaker 3: does save your life. But yeah, I like that.
• 22:10
  Speaker 2: That's the new trauma. There we go. All right.
• 22:13
  Speaker 1: Well, I promised we would jump into the SAS and
• 22:15
  Speaker 1: the AI and the connected care. Let's go through that because,
• 22:18
  Speaker 1: and I think just this open-ended question here, what's probably
• 22:24
  Speaker 1: the biggest confusion that you've seen either patients or doctors
• 22:30
  Speaker 1: or just the general public, their understanding of AI in
• 22:34
  Speaker 1: sleep health and in medical devices in general versus kind
• 22:37
  Speaker 1: of what we're seeing in the huge headlines and the
• 22:40
  Speaker 1: huge valuation numbers that are out there and the huge
• 22:43
  Speaker 1: doomsday type of headlines we're seeing.
• 22:45
  Speaker 2: Yeah.
• 22:46
  Speaker 3: Yeah.
• 22:46
  Speaker 4: That's, it's funny cause we're sort of in this, um, this,
• 22:49
  Speaker 4: I would say, you know, mile one of the marathon
• 22:54
  Speaker 4: using your running analogy of, of AI, right? I, I,
• 22:57
  Speaker 4: I don't think we're in the late innings.
• 22:59
  Speaker 3: I was with a, um, an executive vice president of
• 23:02
  Speaker 3: one of the top, um, tech companies in the hardware
• 23:05
  Speaker 3: plus tech space. And so it was the EVP of
• 23:08
  Speaker 3: ops and technology from Cisco. And he basically said, anybody
• 23:15
  Speaker 3: who tells you they're an expert in AI and they
• 23:17
  Speaker 3: can predict what's happening is wrong. He said, because I'm
• 23:20
  Speaker 3: talking to the actual experts and they're saying they don't know.
• 23:23
  Speaker 3: And so I'm a long way away from that. I
• 23:27
  Speaker 3: believe I could be called an expert in the field
• 23:30
  Speaker 3: of med tech. and biomedical engineering, but I am not
• 23:35
  Speaker 3: a computer science lead. I'm not an AI lead, but
• 23:40
  Speaker 3: I watch it very carefully. And as you said earlier
• 23:42
  Speaker 3: in the podcast here, RestMed was the pioneer for digitally
• 23:48
  Speaker 3: cloud-connected systems. And so now we are still on that vanguard.
• 23:53
  Speaker 3: We're still on that front. We want to be the
• 23:56
  Speaker 3: absolute pioneer of how to apply appropriately using privacy, using cybersecurity,
• 24:02
  Speaker 3: using interoperability, being right on the cutting edge of applying
• 24:07
  Speaker 3: AI appropriately. So what have we done? Well, so far
• 24:10
  Speaker 3: we've released two AI products into the market. I don't
• 24:13
  Speaker 3: talk about all our research. I don't talk about all
• 24:16
  Speaker 3: our internal work because until it comes to market, it's
• 24:19
  Speaker 3: actually not worth talking about. It's not having an impact
• 24:22
  Speaker 3: on a patient or a physician or a provider. And
• 24:24
  Speaker 3: so we've released two that I'll talk about. One is
• 24:27
  Speaker 3: generative AI. And we called it Project Dawn, not as
• 24:32
  Speaker 3: in dawn a person, but as in dawn the sun
• 24:35
  Speaker 3: rising and you're feeling refreshed. And so Project Dawn is
• 24:39
  Speaker 3: what I'll call a digital sleep health concierge. Dawn has
• 24:45
  Speaker 3: 37 years of biomedical and medical research, all ResMed's history.
• 24:52
  Speaker 3: Dawn has access to all the peer-reviewed published evidence that
• 24:55
  Speaker 3: ResMed's ever done and that's available in the market. And
• 24:58
  Speaker 3: Dawn can engage with a person. Think about our conversation
• 25:02
  Speaker 3: just then. I threw out some facts around drinking five
• 25:04
  Speaker 3: glasses of water or exercising 30 minutes to 60 minutes
• 25:08
  Speaker 3: three to five times a week and how both of
• 25:10
  Speaker 3: those can lead to good sleep. Dawn knows that. But
• 25:12
  Speaker 3: Dawn also knows the 55 other amazing tips that sleep
• 25:16
  Speaker 3: physicians are giving to patients and asking questions of them
• 25:21
  Speaker 3: as well. And so Dawn has the ability to engage
• 25:25
  Speaker 3: with someone on better sleep health. To help them get,
• 25:28
  Speaker 3: if they have any issues with sleep apnea or restless
• 25:32
  Speaker 3: leg syndrome or insomnia, help them find the right questions,
• 25:36
  Speaker 3: even right questionnaires to get screened. Help them find a
• 25:40
  Speaker 3: pathway to diagnostics. Oh, here's a home sleep apnea testing
• 25:43
  Speaker 3: facility available through your local physician group. And then a
• 25:48
  Speaker 3: right path to therapy, ultimately, if that is appropriate. And
• 25:54
  Speaker 3: so what I love about a generative, and we just
• 25:56
  Speaker 3: had it on resmed.com, right? Just on our website. We said,
• 25:59
  Speaker 3: you know what? Why don't we put, I mean, why
• 26:01
  Speaker 3: don't we give it to our most important customers who
• 26:04
  Speaker 3: are these patients on MyAir, right? They've chosen to download
• 26:07
  Speaker 3: an app. They've engaged with ResMed and checked. So we
• 26:10
  Speaker 3: put MyAir, we put Dawn on MyAir just a couple
• 26:14
  Speaker 3: of quarters ago, just as an experiment. How many inquiries
• 26:17
  Speaker 3: do you think we had in the last quarter? 1.5
• 26:18
  Speaker 3: million inquiries. in the first 90 days from people who
• 26:25
  Speaker 3: were already screened, diagnosed, treated. They're on therapy, but they
• 26:29
  Speaker 3: had other questions. And so, you know, optimal sleep health
• 26:33
  Speaker 3: isn't just about, oh, I'm on ResMed, CPAP therapy, I'm
• 26:36
  Speaker 3: set for life, save my job, save my marriage, save
• 26:38
  Speaker 3: my life, I'm good. No, it's about optimization. And so
• 26:42
  Speaker 3: that's what's interesting for me is that that AI, fully scalable,
• 26:46
  Speaker 3: now available on my air, is going to engage people more.
• 26:49
  Speaker 3: And I bet you that the people who do more inquiries-
• 26:52
  Speaker 3: will find that they have better adherence, they have better sleep,
• 26:56
  Speaker 3: they have better sleep architecture, and better outcomes. And so
• 27:00
  Speaker 3: that's a prediction for the future. But that's just one
• 27:02
  Speaker 3: use of generative AI, and I can talk more.
• 27:05
  Speaker 2: Yeah, 1.5 million queries.
• 27:07
  Speaker 1: That's very impressive in the first few quarters already. It
• 27:09
  Speaker 1: shows that it's also showing that they're trying it, and
• 27:14
  Speaker 1: whatever they're getting out of it is useful enough for
• 27:16
  Speaker 1: them that they are asking it again and asking further questions,
• 27:19
  Speaker 1: asking further questions.
• 27:20
  Speaker 2: So where is that data coming from?
• 27:22
  Speaker 1: Coming from that is supporting those responses?
• 27:25
  Speaker 2: I mean, you have the 28 billion nights of sleep.
• 27:29
  Speaker 1: You have, you know, we talked about the fun fact
• 27:30
  Speaker 1: of five glasses of water helps improve his sleep. But
• 27:33
  Speaker 1: what other data sources are going in there to help
• 27:36
  Speaker 1: these patients connect the dots between if you do this
• 27:39
  Speaker 1: healthy lifestyle choice, it's going.
• 27:41
  Speaker 2: To improve your sleep like that?
• 27:43
  Speaker 3: Yeah, no, Matt, it's a really good question. And as
• 27:47
  Speaker 3: I said, I don't have, like all the AI people,
• 27:49
  Speaker 3: I don't have the answers yet. Mm-hmm. All I know
• 27:53
  Speaker 3: is that when you make something like that available and
• 27:56
  Speaker 3: you have repeat use, that's the hypothesis is there could
• 28:01
  Speaker 3: be something very interesting that comes out of this. When
• 28:04
  Speaker 3: we first put the digital cloud connectivity, we never thought
• 28:08
  Speaker 3: that we'd drive adherence up 27%. We thought maybe we
• 28:12
  Speaker 3: might move it by 5%, right? We might turn 60%
• 28:16
  Speaker 3: adherence to 65. When we turn 60 to 70, just
• 28:20
  Speaker 3: by giving the doctors the data, By the way, in 2002,
• 28:25
  Speaker 3: I worked at the University of California, San Diego with
• 28:28
  Speaker 3: Carl Stepanovsky, who was a PhD in sleep science. And
• 28:30
  Speaker 3: we did a research in the VA, a research project.
• 28:34
  Speaker 3: And all we did was we put either pager device
• 28:38
  Speaker 3: or a fake pager. on the back of a military
• 28:43
  Speaker 3: vet's CPAP device. Early days. The fake ones moved adherence
• 28:48
  Speaker 3: up by 5%. Just the thought that the doctor might
• 28:53
  Speaker 3: hold me accountable moved up 5%. The actual tracking of
• 28:56
  Speaker 3: it moved it up 10%. And now the engagement moved
• 29:00
  Speaker 3: it up another 27%. So this AI interaction with Dawn, yes,
• 29:05
  Speaker 3: Dawn has... all information that we can put on there, right?
• 29:09
  Speaker 3: We've got privacy, cybersecurity, interoperability boundaries. Nothing's allowed outside the sandpit.
• 29:15
  Speaker 3: We definitely put guards around what to do and not
• 29:17
  Speaker 3: to do. I think the fact that there are 1.5
• 29:21
  Speaker 3: million inquiries, the fact that people were repeat inquirers, I
• 29:26
  Speaker 3: think we're going to look back on this and say
• 29:30
  Speaker 3: that engagement wasn't just one thing, oh, this water, this exercise,
• 29:34
  Speaker 3: this tip A, B, or C. It's about personalizing care.
• 29:39
  Speaker 3: There are 8 billion people. on Planet Earth Plus, and
• 29:41
  Speaker 3: they actually all have unique persons, unique brains, and unique DNA,
• 29:48
  Speaker 3: unique ways of wanting to get medical care. And most
• 29:51
  Speaker 3: medicine is like, well, let's make one and give it
• 29:54
  Speaker 3: to all. Let's make the same heart valve and give
• 29:56
  Speaker 3: to everyone. Let's make the same pacemaker and give it
• 29:57
  Speaker 3: to everyone. Let's make the same CPAP, give to everyone.
• 30:00
  Speaker 3: We've started with CPAP. We went to APAP, automated positive
• 30:04
  Speaker 3: air pressure, where it's actually breath by breath adjusting your pressure.
• 30:08
  Speaker 3: We have ventilation therapies that follow you with not only
• 30:10
  Speaker 3: adjusting pressure, inhalation, but exhalation, and a whole bunch of
• 30:15
  Speaker 3: really cool non-invasive ventilation and adaptive server ventilation algorithms that
• 30:19
  Speaker 3: we've got that personalize care. But when I ask you
• 30:22
  Speaker 3: a question in plain language and engage with you using
• 30:25
  Speaker 3: generative AI, it becomes really personal. And so that personalized
• 30:29
  Speaker 3: care I think is really important. The digitization of care
• 30:32
  Speaker 3: is really important. AI brings both of those together. I
• 30:36
  Speaker 3: want to talk about actually something you might consider this
• 30:38
  Speaker 3: a trivial AI product, but I actually think it's our,
• 30:43
  Speaker 3: it's our first FDA. It was our first FDA cleared
• 30:47
  Speaker 3: AI product. And so 510 K and it's called smart comfort.
• 30:52
  Speaker 2: Okay.
• 30:53
  Speaker 3: So within the, the, the CPAP device, uh, we have, uh, heated,
• 30:59
  Speaker 3: humidified tubing, right? So you can get the exact temperature, humidity,
• 31:05
  Speaker 3: and ramp time to fall asleep that you want. All these,
• 31:08
  Speaker 3: what we call comfort features. They're not medical features. The
• 31:10
  Speaker 3: physician doesn't write a prescription for them, but they're available
• 31:14
  Speaker 3: on the device. And they've been there for a decade plus. 95%
• 31:17
  Speaker 3: of people don't adjust them. They just don't because they
• 31:20
  Speaker 3: don't know about them. They're like, oh, well, my life's changed.
• 31:24
  Speaker 3: But they don't know how to optimize it. We added
• 31:26
  Speaker 3: this smart comfort. It's AI, works in plain language, and
• 31:29
  Speaker 3: it could ask a really trivial question like this. You know, Matt,
• 31:34
  Speaker 3: do you prefer when you're falling asleep to feel like
• 31:36
  Speaker 3: you're walking, hiking through the mountains of Yosemite? Or do
• 31:42
  Speaker 3: you prefer, Matt, to feel like you are on a
• 31:45
  Speaker 3: beach in Panama walking, you know, past a fishing village?
• 31:50
  Speaker 3: Simple plain language, yeah. And then by that, it's going
• 31:52
  Speaker 3: to know, do you want cold temperature, lower humidity? Do
• 31:55
  Speaker 3: you want higher temperature, high humidity while you're falling asleep?
• 31:59
  Speaker 3: And it'll just ramp up from 60, 70, 80, 85
• 32:02
  Speaker 3: degrees from 50 to 55 to 65, 75% humidity because
• 32:06
  Speaker 3: you answered, Pat. I mean, I'm just making it up.
• 32:09
  Speaker 2: If you should have asked here. Which would you prefer?
• 32:12
  Speaker 2: I like which would you prefer? But I also like
• 32:14
  Speaker 2: the cool. I feel like I'm more of the cooler.
• 32:16
  Speaker 2: I like cooler temperatures. That's interesting.
• 32:19
  Speaker 3: So... So what you could say is you'd say, well,
• 32:23
  Speaker 3: I don't know AI, but hey, smart comfort, I'd like
• 32:27
  Speaker 3: to try Yosemite tonight. And maybe try Panama tomorrow.
• 32:31
  Speaker 2: Night, you know? And then let's see.
• 32:33
  Speaker 3: And by the way, the algorithm, I'm just making up
• 32:36
  Speaker 3: the terms. The engineers have written much better stuff than
• 32:39
  Speaker 3: the product leads.
• 32:40
  Speaker 2: Than the CEO.
• 32:42
  Speaker 3: By the way, in this job, you realize you were like,
• 32:45
  Speaker 3: I was a biomedical engineer. I used to run marketing.
• 32:47
  Speaker 2: I used to run a sales team.
• 32:49
  Speaker 3: I'm so far from it now that I realize that
• 32:52
  Speaker 3: I'm just the conductor of the orchestra here. But when
• 32:56
  Speaker 3: I used to play lead violin, that question in plain
• 33:00
  Speaker 3: language can then determine what that therapy will do that night.
• 33:05
  Speaker 3: And what we found is it sounds trivial, right? Oh,
• 33:07
  Speaker 3: and the other question is like, how long do you
• 33:08
  Speaker 3: fall asleep? Like, do you need to listen to five
• 33:11
  Speaker 3: minutes of that Netflix before you're out? Or if you're
• 33:14
  Speaker 3: on Amazon Prime and I have to listen to three episodes.
• 33:19
  Speaker 3: then we know is the ramp time means sleep latency time.
• 33:23
  Speaker 3: MSLT is what, what it's, what it's, uh, called. How
• 33:27
  Speaker 3: long does it take you to get to sleep? Should
• 33:28
  Speaker 3: that ramp time be set for five minutes or, or
• 33:31
  Speaker 3: 30 minutes or et cetera to get, to get to,
• 33:32
  Speaker 3: to set pressure. That little thing that sounds trivial has
• 33:36
  Speaker 3: now turned from 5% of people adjusting these things to
• 33:40
  Speaker 3: now everyone can adjust the smart comfort, um, settings we've found.
• 33:45
  Speaker 3: And this is, you know, uh, uh, presented data at
• 33:48
  Speaker 3: the European Respiratory Society and the Sleep Conference actually in
• 33:51
  Speaker 3: June this year, 6% higher adherence for patients using Smart Comfort.
• 33:57
  Speaker 2: Just that extra adjustment.
• 33:59
  Speaker 3: Just that extra adjustment. It now feels right and what
• 34:02
  Speaker 3: you want. I've used it myself and I actually had
• 34:07
  Speaker 3: never adjusted those things.
• 34:08
  Speaker 2: I'd already left it on auto-adjust.
• 34:11
  Speaker 3: And I found out, my wife's from Panama. But I
• 34:14
  Speaker 3: found out I actually prefer Yosemite.
• 34:17
  Speaker 2: Don't tell her. Lisey, if you're listening, I love you.
• 34:19
  Speaker 1: Yes.
• 34:20
  Speaker 2: I'm going to go off on a tangent here.
• 34:22
  Speaker 3: Okay.
• 34:23
  Speaker 2: With the CEO comment you just made, you're the conductor.
• 34:26
  Speaker 3: Yeah.
• 34:28
  Speaker 1: How did you transition from being the one who knows
• 34:31
  Speaker 1: the best in either the bioengineering side or knowing the
• 34:34
  Speaker 1: best in the marketing side to allowing someone else to
• 34:38
  Speaker 1: know potentially more than you do that instant? Because that's
• 34:41
  Speaker 1: a huge transition and you don't, You have to be
• 34:44
  Speaker 1: the leader, but you need to know just enough to
• 34:47
  Speaker 1: understand how the company is working, but you can't waste
• 34:50
  Speaker 1: all your time focusing on the nitty gritties that makes
• 34:53
  Speaker 1: someone really knowledgeable about that specific space.
• 34:57
  Speaker 3: Yeah, it's a really good question. And all of your
• 35:01
  Speaker 3: listeners have gone through their careers and found out where
• 35:05
  Speaker 3: their skill sets are and developed. I think people talk
• 35:10
  Speaker 3: about servant leader, CEO, or you know, having, um, the
• 35:15
  Speaker 3: ability to, to, to recognize, you know, where you should
• 35:19
  Speaker 3: zoom in and where you should zoom out. Um, I,
• 35:22
  Speaker 3: I think for me as CEO of, you know, I'll
• 35:25
  Speaker 3: talk specifically CEO of ResMed, which is a digitally driven
• 35:30
  Speaker 3: med tech company. I think having those T skills, right.
• 35:34
  Speaker 3: So that I've, I've, I've had, yeah, some depth in,
• 35:37
  Speaker 3: in my early years around product design, product engineering, process engineering, um,
• 35:42
  Speaker 3: I've had some of those T-skills in having run a
• 35:45
  Speaker 3: marketing team. By the way, before we had all this
• 35:47
  Speaker 3: amazing data that you now get from you actually know
• 35:52
  Speaker 3: who clicked. You don't have a magazine they're turning or,
• 35:55
  Speaker 3: you know, and you don't know whether like that ad worked. Now,
• 35:59
  Speaker 3: but those T-skills in marketing in the early days and
• 36:02
  Speaker 3: in T-skills of being out in the street and seeing
• 36:04
  Speaker 3: how hard it is at the front line of sales,
• 36:06
  Speaker 3: for instance. I mean, there's that difficulty of getting that
• 36:10
  Speaker 3: ad really that moment of truth where someone says yes
• 36:14
  Speaker 3: and buys that product or no and doesn't. I think
• 36:20
  Speaker 3: it's important to have that. But then the horizontal part
• 36:23
  Speaker 3: of the T is the ability to look across 11,000
• 36:27
  Speaker 3: risk medians across 140 countries and say, yeah, where is
• 36:31
  Speaker 3: the most important area for our strategy to go, for
• 36:34
  Speaker 3: our product team to go for our investments of capital,
• 36:38
  Speaker 3: research and development dollars, and what we're doing now with
• 36:41
  Speaker 3: transformation around our sales and marketing functions in the land
• 36:45
  Speaker 3: of AI and our supply chain. Think of all that
• 36:48
  Speaker 3: we learned during COVID and beyond of transformation of our
• 36:50
  Speaker 3: supply chain as well. And so I look at it
• 36:53
  Speaker 3: this way and say, that transition from specialist to leader,
• 36:58
  Speaker 3: many of us have made in our careers, but I
• 37:00
  Speaker 3: think it's not false humility. The CEO is the furthest
• 37:05
  Speaker 3: They're literally the furthest position from that sale. The salesman goes,
• 37:10
  Speaker 3: reports to someone, reports to someone, reports to the head
• 37:12
  Speaker 3: of the business unit, reports to the CEO. But when
• 37:15
  Speaker 3: you're talking to a salesperson, asking the right questions to
• 37:19
  Speaker 3: understand what they need and how they can be empowered more,
• 37:22
  Speaker 3: that's what a good CEO is. And talk to that engineer. Like,
• 37:26
  Speaker 3: why is that? We worked for seven years on this
• 37:29
  Speaker 3: fabric technology, right? So for, you know, Resume is 37
• 37:33
  Speaker 3: years old. Um, for 37 years in our space, liquid
• 37:39
  Speaker 3: silicon rubber, LSR, medical grade LSR was used to provide
• 37:43
  Speaker 3: the patient interface, the part where the pneumatic stent touches
• 37:47
  Speaker 3: the nose or the mouth if you're a mouth breather.
• 37:50
  Speaker 3: And for seven years, I'd been, you know, in our
• 37:52
  Speaker 3: Singapore fabrics engineering team asking questions about when are we
• 37:56
  Speaker 3: going to get a fabric mask, a fabric that can hold, but,
• 38:00
  Speaker 3: but keeping, you know, uh, four to 20, or even
• 38:04
  Speaker 3: with a ventilator, 25 or 30 centimeters of water pressure
• 38:08
  Speaker 3: all night, every night, that's cleanable, washable, and can last
• 38:13
  Speaker 3: a period of time. The replacement cycles, 30 to 90
• 38:16
  Speaker 3: days on these masks has got to last that long.
• 38:18
  Speaker 3: It's very difficult. And so I was just asking questions
• 38:21
  Speaker 3: of that engineering team that, yeah, I knew something about
• 38:25
  Speaker 3: high temperature, high pressure, multi-cavity tool molding from my times
• 38:30
  Speaker 3: in the factory in the LSR lines. But to get
• 38:33
  Speaker 3: fabric perfectly molded to that at the end, it's almost impossible.
• 38:37
  Speaker 3: And so I didn't like trivialize the engineering problem. Right.
• 38:41
  Speaker 3: But I did just walk in and say, guys, you've
• 38:43
  Speaker 3: got to produce a product. I'm sick of seeing prototypes.
• 38:47
  Speaker 3: And so it was less about being a nerdy engineer
• 38:50
  Speaker 3: that can empathize with how difficult it is. It was
• 38:52
  Speaker 3: more just being a representing the billion people worldwide who
• 38:57
  Speaker 3: absolutely back here and saying, we want that fabric. We
• 39:00
  Speaker 3: need that in market. I even told them, they kept
• 39:02
  Speaker 3: giving me prototypes. I'm a user of our product. They
• 39:05
  Speaker 3: kept giving me prototypes. I said, I'm not taking any
• 39:07
  Speaker 3: more prototypes home because I'm sick of having great feeling
• 39:10
  Speaker 3: for me and none of my patients get it out
• 39:13
  Speaker 3: there in the market. So until you have something that's
• 39:15
  Speaker 3: coming off the production line, don't give me another one.
• 39:17
  Speaker 2: I wasn't playing a game.
• 39:20
  Speaker 3: It was true. Next time I was in Singapore, they
• 39:23
  Speaker 3: gave me a product off the production line and I
• 39:28
  Speaker 3: put it on and I thought, oh my goodness, this
• 39:31
  Speaker 3: is amazing. So we've changed the basis of competition. That
• 39:35
  Speaker 3: transition from being the engineer that did it to being
• 39:38
  Speaker 3: the CEO who said, hey, think about the patient, do
• 39:41
  Speaker 3: the right thing, get me something that works. You don't
• 39:44
  Speaker 3: know what motivated them. Probably it was just a breakthrough
• 39:47
  Speaker 3: in the actual technology. But I think having that That
• 39:50
  Speaker 3: milestone to get to, that if we get this done,
• 39:53
  Speaker 3: we're going to get there, made sense. You know, I
• 39:57
  Speaker 3: can say the same thing about our marketing. We just
• 39:58
  Speaker 3: did a whole rebrand of the whole ResMed brand around
• 40:01
  Speaker 3: breathing of the lungs and oxygenation of the blood, like
• 40:04
  Speaker 3: all the technologies in our actual marketing brand. It looks like,
• 40:08
  Speaker 3: I talked to a cardiovascular physician. He's like, I see
• 40:10
  Speaker 3: what your rebrand is. That's a bunch of pillows piled
• 40:12
  Speaker 3: on each other.
• 40:13
  Speaker 2: I'm like, no, it's not. That's the alveoli.
• 40:15
  Speaker 3: That's the movement of the lungs. And that's blue to
• 40:18
  Speaker 3: red is oxygenation of blood and deoxygenated blood. He's like, yeah, yeah, yeah.
• 40:23
  Speaker 3: It's a bunch of pillows. Okay.
• 40:25
  Speaker 2: You know what?
• 40:26
  Speaker 1: Well, it sounds like you're being able to keep everyone
• 40:30
  Speaker 1: on the same message. It sounds like what it is.
• 40:32
  Speaker 1: And you talk about treating the patient. And I was
• 40:34
  Speaker 1: with the engineers in Singapore. You just had to remind them.
• 40:38
  Speaker 1: Something had to get out there to help the patients out.
• 40:40
  Speaker 3: Yeah.
• 40:41
  Speaker 2: Yeah.
• 40:42
  Speaker 3: It's always, you know, in med tech, it's always all
• 40:45
  Speaker 3: about the patient. They, you know, we all talk about, oh,
• 40:47
  Speaker 3: look at all of our customers. Customers, there's a hierarchy.
• 40:51
  Speaker 3: The top of the hierarchy is the person. The person
• 40:54
  Speaker 3: who's suffocating, who has restless legs, who can't get to
• 40:57
  Speaker 3: sleep with insomnia or who has COPD. Then after that,
• 41:00
  Speaker 3: of course, there's the physician who needs to manage that
• 41:03
  Speaker 3: patient and engage with them and write the prescription. But
• 41:06
  Speaker 3: then there's the healthcare provider. For us, it's DMEs and HMEs,
• 41:10
  Speaker 3: these customers that do this really hard work of dealing
• 41:13
  Speaker 3: with insurance companies, getting product in people's hands, these respiratory
• 41:17
  Speaker 3: therapists who actually choose the mask. And by the way,
• 41:20
  Speaker 3: they're doing a great job of choosing these new fabric
• 41:22
  Speaker 3: masks because they're like, oh, no, absolutely try that. But
• 41:26
  Speaker 3: then another customer group is the community, the Medicare system,
• 41:31
  Speaker 3: or if it's public health, like many parts of Western
• 41:35
  Speaker 3: and Northern Europe, or the employer in this country who
• 41:40
  Speaker 3: pay the bills. And actually, a big area we've invested
• 41:43
  Speaker 3: is in healthcare economics and outcomes research to show that
• 41:48
  Speaker 3: our therapy not only saves jobs, saves marriages, saves lives,
• 41:52
  Speaker 3: it also saves money. For every hour of use of
• 41:57
  Speaker 3: your CPAP, we've got a dose-response relationship, every hour of
• 42:00
  Speaker 3: use up to seven hours, there's a 7% reduction in
• 42:04
  Speaker 3: total healthcare costs. So it can be up to 50%
• 42:08
  Speaker 3: reduction of healthcare costs for the patient fully using their
• 42:12
  Speaker 3: device versus an untreated sleep apnea patient. That sort of
• 42:15
  Speaker 3: stuff is really important. But no, you're right. I think
• 42:17
  Speaker 3: the CEO has to say, customer first, patient first, has
• 42:22
  Speaker 3: to say, we've got to get this technology to market
• 42:24
  Speaker 3: and has to allocate capital around all that and has
• 42:26
  Speaker 3: to have the humility to recognize they're not the expert,
• 42:29
  Speaker 3: but have the ability to ask the right questions and
• 42:32
  Speaker 3: then allocate capital and strategy and direction based upon the
• 42:37
  Speaker 3: right answers to those questions.
• 42:39
  Speaker 1: That's almost a perfect segue, the allocation of capital here,
• 42:42
  Speaker 1: because we're over 50 minutes in and we haven't even
• 42:45
  Speaker 1: talked about some of the recent acquisitions you've made.
• 42:49
  Speaker 2: Noctrix comes to.
• 42:50
  Speaker 1: Mind because you talked about expanding into insomnia and restless
• 42:54
  Speaker 1: leg syndrome. The restless leg syndrome and Noctrix is that
• 42:58
  Speaker 1: connection there. What's the thinking behind these acquisitions and how
• 43:04
  Speaker 1: does that play into your strategy of broadening what ResMed
• 43:09
  Speaker 1: can do and help these patients?
• 43:12
  Speaker 2: Yeah, well, it's a really good question.
• 43:14
  Speaker 3: So we invested $ 340 million into Noctrix, and it's a
• 43:20
  Speaker 3: really exciting company. You know, early, early days. I actually
• 43:23
  Speaker 3: look at the company and Sri, the CEO up there
• 43:28
  Speaker 3: in the Bay Area, and I look at Peter Farrell
• 43:32
  Speaker 3: in 1990, right, with his patient one, Eddie Merck. Yeah.
• 43:36
  Speaker 3: And I look at Sri and his team. I mean, look,
• 43:38
  Speaker 3: they're a little further on. It's probably 1992 when we
• 43:40
  Speaker 3: had like 20 million in revenues. But that's about where
• 43:43
  Speaker 3: they're at, right? The problem is very similar for sleep apnea.
• 43:49
  Speaker 3: It's about 40% of the prevalence, right? There's a billion
• 43:52
  Speaker 3: people worldwide with sleep apnea. There's 400 million people worldwide
• 43:55
  Speaker 3: with restless legs syndrome. 7% of US adults kick like
• 44:02
  Speaker 3: multiple times a night. all night and wakes them up
• 44:05
  Speaker 3: wakes the bed partner up actually it's worse than snoring
• 44:08
  Speaker 3: i bet being kicked well physical yeah yeah uh and
• 44:13
  Speaker 3: and uh um but mostly for that person and the
• 44:16
  Speaker 3: only way to treat it is to get up and
• 44:18
  Speaker 3: walk around and so this technology called nidra um uh
• 44:23
  Speaker 3: does this uh appropriate frequency that can get right to
• 44:28
  Speaker 3: the nerve in your legs and make you feel like
• 44:33
  Speaker 3: you're walking while you're sleeping or trying to get to sleep.
• 44:37
  Speaker 3: And you'd ask, like, how could you get to sleep
• 44:39
  Speaker 3: with some stimulation that made it feel like it was
• 44:41
  Speaker 3: walking and you know you're not walking? These people haven't
• 44:45
  Speaker 3: slept for years, maybe decades, when they get this device
• 44:49
  Speaker 3: and it's doing this sort of gentle, you can think
• 44:52
  Speaker 3: of like a gentle massage feeling. It's also telling them psychologically,
• 44:56
  Speaker 3: you're safe. You can now sleep and you won't kick,
• 44:59
  Speaker 3: you won't wake up and you changes their lives. And
• 45:04
  Speaker 3: so the first patients that we're seeing on this dramatic...
• 45:07
  Speaker 3: And by the way, the current therapy for these people
• 45:10
  Speaker 3: are awful drugs. We're talking like ADHD medicines and opiates,
• 45:16
  Speaker 3: opioid medicines. And that's the therapy for RLS? It's awful,
• 45:21
  Speaker 3: awful drug regimen. And so for people who aren't treated
• 45:26
  Speaker 3: by the drugs, getting this prescription is actually relatively easy.
• 45:32
  Speaker 3: and it's changing their lives. So what I love about
• 45:34
  Speaker 3: it is it's $ 340 million investment, but we could be
• 45:37
  Speaker 3: creating here the start of a platform for non-invasive nerve stimulation.
• 45:44
  Speaker 3: You know, Boston Scientific and Medtronic are absolutely the leaders
• 45:49
  Speaker 3: in implantable nerve stimulation, right, in the back and in
• 45:53
  Speaker 3: the brain and elsewhere. ResMed, obviously, you know, 95% of
• 45:58
  Speaker 3: our revenues come inside the home from a non-invasive, completely reversible,
• 46:03
  Speaker 3: drug-free product. Well, that's what NIDRA is. It's a non-invasive,
• 46:08
  Speaker 3: completely reversible, drug-free product to treat restless leg syndrome. And
• 46:13
  Speaker 3: of course, in the future, we'll make it cloud connected
• 46:15
  Speaker 3: and we'll make it able to link into our ecosystem.
• 46:18
  Speaker 3: But right now, mile one of the marathon, really excited
• 46:22
  Speaker 3: to help 400 million people worldwide. And right now, starting
• 46:25
  Speaker 3: with this is appropriate. And what I've said, to your
• 46:29
  Speaker 3: point about the numbers, is that ResMed, you know, generating
• 46:32
  Speaker 3: $ 1. 7 billion a year in cash flow of, you know, 5.5,
• 46:36
  Speaker 3: 6 billion in revenues. You know, obviously we have our dividends,
• 46:40
  Speaker 3: we have our share buyback, and these are really important
• 46:42
  Speaker 3: uses of capital. The most important use of capital is
• 46:45
  Speaker 3: R & D. That's how we have the fabric masks.
• 46:47
  Speaker 3: That's how we have the AI. It's how we have
• 46:49
  Speaker 3: the smallest, quietest, most comfortable, most cloud-connected, most intelligent therapies.
• 46:54
  Speaker 3: But there is a little bit of excess cash there.
• 46:56
  Speaker 3: And what are we going to do in terms of
• 46:58
  Speaker 3: appropriate tuck in mergers and acquisitions in that sort of
• 47:01
  Speaker 3: $ 100 to $ 500 million range that are therapies that are
• 47:08
  Speaker 3: for sleep health, breathing health, and health tech at home.
• 47:11
  Speaker 3: And in the case of NIDRA, yeah, non-invasive, drug-free, completely reversible,
• 47:16
  Speaker 3: prescription written by a sleep doctor and sold through DME, HME,
• 47:21
  Speaker 3: distributor channels, healthcare provider channels that are already, you know,
• 47:24
  Speaker 3: ResMed's already the number one brand in sleep health. So
• 47:27
  Speaker 3: really exciting early days and more to come if you
• 47:31
  Speaker 3: think about the broader field of sleep health and breathing health.
• 47:33
  Speaker 1: Well, let's close out there. You caught my attention, the
• 47:37
  Speaker 1: $ 1. 6 billion in free cash flow that you had.
• 47:39
  Speaker 3: $ 1. 7. $ 1. 7. Oh, I got.
• 47:41
  Speaker 1: To factor myself before this call. That's a big difference.
• 47:46
  Speaker 1: We talked about pretty much the last 25 years, you
• 47:49
  Speaker 1: running ResMed and the shift from that standalone medical device
• 47:54
  Speaker 1: company to this connected care, expanding from just sleep apnea to.
• 47:59
  Speaker 2: new sleep diseases, maybe not the next 25 years. I'm
• 48:05
  Speaker 2: sure you want to retire at some point, right?
• 48:07
  Speaker 1: But the next 5, 10 years, what are you seeing
• 48:12
  Speaker 1: that's out there that you say, this is interesting, this
• 48:15
  Speaker 1: could be something that fits well with ResMed?
• 48:17
  Speaker 3: Yeah, look, I obviously, you know, I know in your podcast,
• 48:22
  Speaker 3: you know, competitors and others may be listening.
• 48:24
  Speaker 2: It's not going to give like the whole game plan. No,
• 48:25
  Speaker 2: I don't think it's like what you need to do
• 48:27
  Speaker 2: next week or which companies. But yeah. I'm targeting this one.
• 48:30
  Speaker 3: No, but look, if I look at our 2030 strategy, right,
• 48:34
  Speaker 3: which is to help the world sleep better, breathe better,
• 48:37
  Speaker 3: and live better lives with healthcare delivered in their own
• 48:40
  Speaker 3: home that they love, RestMed is absolutely the world leader
• 48:45
  Speaker 3: in that. sleep medicine. We are the leader in sleep
• 48:48
  Speaker 3: apnea treatment. We will be the leader in insomnia, and
• 48:52
  Speaker 3: we will be the leader in restless leg syndrome. Actually, insomnia,
• 48:56
  Speaker 3: we haven't talked about. And so I'll cover a little
• 48:58
  Speaker 3: bit on that one. And then COPD and overlap syndrome,
• 49:01
  Speaker 3: where we have non-invasive ventilators like the air curve STSTA
• 49:06
  Speaker 3: that can help treat someone who has both obstructive sleep
• 49:09
  Speaker 3: apnea and COPD. But as I look out these next
• 49:13
  Speaker 3: five years, I think you know, I mentioned insomnia, right
• 49:17
  Speaker 3: at the moment we have cognitive behavior therapy for insomnia, CBTI.
• 49:21
  Speaker 3: And it's a paid product, digital product called Somnia that
• 49:26
  Speaker 3: we are selling in Germany. And we have reimbursement from
• 49:29
  Speaker 3: the German government through a digital investigational approach called DIGA.
• 49:36
  Speaker 3: And it's been successful in its space, right? In that
• 49:39
  Speaker 3: one market, we've been able to show that it can
• 49:42
  Speaker 3: grow and grow revenues and help people get to sleep,
• 49:45
  Speaker 3: stay asleep, and wake up refreshed if they have insomnia.
• 49:48
  Speaker 3: And cognitive behavior therapy is really a way of engaging
• 49:51
  Speaker 3: with the patient through the app to help them with
• 49:54
  Speaker 3: their insomnia. I look at that 800 million people worldwide
• 49:58
  Speaker 3: and say, why are we only, and we're in 140 countries,
• 50:00
  Speaker 3: 144 countries, why are we only treating people in one
• 50:03
  Speaker 3: country with one approach? I think that we can unlock
• 50:07
  Speaker 3: that Somnio app and say, well, why, you know, we
• 50:10
  Speaker 3: put Dawn on my app. Why wouldn't we put CBTI
• 50:15
  Speaker 3: on my app? Because my bet, they call it COMISA,
• 50:19
  Speaker 3: Comorbid Insomnia and OSA.
• 50:21
  Speaker 2: Okay.
• 50:22
  Speaker 3: My bet is that there is, and there's some prevalence
• 50:25
  Speaker 3: data to back this up, not just the CEO's bet,
• 50:28
  Speaker 3: that there's a good chunk of people, we brag about 87%
• 50:31
  Speaker 3: in here, it's a day 90. That means 13% aren't
• 50:34
  Speaker 3: adherent at day 90. My bet is there's a good two, three,
• 50:40
  Speaker 3: or 4%, you know, two, three, 400 basis points of
• 50:44
  Speaker 3: extra adherence available for treating insomnia, just in our core base.
• 50:49
  Speaker 3: And then you think about, well, would there be non-invasive,
• 50:53
  Speaker 3: completely reversible, drug-free medical devices that could also treat insomnia?
• 50:59
  Speaker 3: So Watch this space. Those 800 million people need something.
• 51:03
  Speaker 3: We've got a digital product now. I think it will
• 51:05
  Speaker 3: be a combination of hardware and software. Won't say any
• 51:08
  Speaker 3: more than ResMed looks at this space very carefully. We
• 51:11
  Speaker 3: sometimes take minority stakes in companies in the space. I'm
• 51:15
  Speaker 3: excited about all of Sleep Health, all 2.7 billion people
• 51:19
  Speaker 3: we can help. And Insomnia is a big part of
• 51:22
  Speaker 3: those next five years.
• 51:23
  Speaker 2: I'm excited to watch that. Mick, thanks for joining us today.
• 51:26
  Speaker 2: I appreciate it.
• 51:28
  Speaker 3: Happy to be here, Matt. Thanks for having me here
• 51:29
  Speaker 3: in the studio.
• 51:30
  Speaker 2: Absolutely.
• 51:31
  Speaker 1: And thank you to our producers, Aditya Simani and Mariam Thawele,
• 51:34
  Speaker 1: for all the behind-the-scenes work. And thank you to our
• 51:37
  Speaker 1: listeners for tuning in today. We hope you join us
• 51:39
  Speaker 1: for future episodes. And if you'd like to stay up
• 51:41
  Speaker 1: to date, you can click the subscribe button on Spotify
• 51:44
  Speaker 1: or your favorite streaming platform.
• 51:46
  Speaker 2: Take care.