As ResMed seizes opportunities in the CPAP machine market, left open due to Philips’ ongoing respiratory device recall issues, the company is actively refining its long-term growth strategy, resulting in some short-term workforce adjustments.
During a recent investor call to discuss ResMed’s financial performance in the first quarter of fiscal year 2024, CEO Mick Farrell shared that the company’s efforts to “accelerate profitable growth and secure long-term success” have led to a 5% reduction in its global workforce.
Farrell emphasized the importance of focusing on areas that are critical for long-term success, such as investments in digital health technology, hardware and software development to create cutting-edge healthcare solutions. These changes have influenced some of ResMed’s teams, but the company believes these steps are necessary to enhance growth and refocus on its long-term mission.
While the exact number of employees affected was not disclosed, ResMed had over 10,140 employees according to its most recent annual report. This reduction is expected to be completed during the second quarter of ResMed’s fiscal year.
When asked about potential future restructuring, Farrell indicated that the recent actions represent the primary changes for the time being, with only minor adjustments to the operating model and roles. ResMed is now focusing on moving forward.
ResMed announced these workforce changes as it reported strong growth in its financial results. In the first quarter of fiscal year 2024, the company achieved revenues exceeding $1.1 billion, a 16% increase year-over-year. Despite facing additional expenses related to acquisitions and corrective actions, the company’s net profits also saw a rise, with quarterly net income surpassing $219 million, up 4% from the previous year.
However, the gross margin contracted due to these expenses, decreasing from nearly 57% to 54.4%. This led to a decrease in the company’s stock price, which had been steadily declining. After falling below the $200 mark earlier in the year, the stock has continued to trade below $150, briefly reaching a three-year low of $124 in after-hours trading.
