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ResMed Layoff 5% Amid Reports of Strong Q124
The company said the layoffs, along with other actions, are to accelerate profitable growth and power long-term success.
October 27, 2023
2 Min Read
Andry Djumantara / iStock via Getty Images
In an attempt to fine tune its long-term growth strategy amid unknowns as to when Philips will reenter the sleep apnea market, ResMed seems to be refocusing and rightsizing the business in anticipation, resulting in a 5% reduction in its global workforce. The company, which has more than capitalized on the unprecedented demand for sleep apnea devices while Philips continues to wade through recall woes, announced during its Q124 earnings call that it was taking actions to “accelerate profitable growth across ResMed and to power our long-term success.”
These actions, according to Mick Farrell, ResMed CEO, include putting a stop to more than one project, increasing investment in digital health, and focused hardware and software development.
“We have stopped some projects that were not working out as well as we thought,” he said in the earning call, according to a SeekingAlpha transcript. “We've increased investment in areas that we believe will be pivotal to long term success, such as our digital health tech investments as well as focused hardware and software development. Creating the smallest, the quietest, the most comfortable, the most connected and the most intelligent healthcare solutions in the market.”
The changes, however, mean layoffs. While the company didn’t disclose the exact number affected in the cuts, the most recent information available puts its company count at just over 10,000 employees, meaning a 5% cut could impact at least 500 individuals.
“These changes have impacted some of our teams,” Farrell said. “And this week, we have taken actions that resulted in a reduction of our global workforce by 5%. Decisions like this that impact people are never easy. However, we know that we are doing the right thing, and we're doing the right thing to accelerate our growth and to refocus on our long-term mission. I feel more strongly than ever that we are well positioned with an incredibly long runway of profitable growth and value creation for all of our stakeholders as we move forward.”
The layoff notice was announced in tandem with the company’s reported quarter of strong growth. For Q124, which began July 1, ResMed saw revenue toping over $1.1 billion, a 16% increase year over year. Net income came in at more than $219 million, up 4% compared to the year prior, and net profits also rose during the quarter. This is despite expenses the company took on in the acquisition of Medifox Dan, increased component and manufacturing costs, and an $8 million provision to handle corrective action costs for some of its Astral ventilators.
ResMed’s gross margin did, however, shrink down to 54.4% due to the expenses from 57% a year ago. Its stock price also saw a hit, one that continues its slow dip downwards over the last few months. The stock first went below $200 in August after the release of its full-year 2023 results and has since continued its trip down, spending the last two months below $150 a share.
About the Author(s)
Managing Editor, MD+DI
Katie Hobbins is managing editor for MD+DI and joined the team in July 2022. She boasts multiple previous editorial roles in print and multimedia medical journalism, including dermatology, medical aesthetics, and pediatric medicine. She graduated from Cleveland State University in 2018 with a bachelor's degree in journalism and promotional communications. She enjoys yoga, hand embroidery, and anything DIY. You can reach her at [email protected].
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