Snoring leader buys restless leg syndrome device maker
The Australian-American medical giant that leads the world in products that treat sleep apnea is turning its attention to another major sleep disorder: restless legs syndrome.
Resmed acquired Noctrix Health, a California-based company that produces a wearable device to treat Will-Ekbom Disease, for US$360 million ($500 million).
The syndrome is the third largest sleep disorder, affecting seven per cent of the adult US population, Resmed boss Mick Farrell told AAP on Friday.
“His legs will turn and he’ll kick, and of course that’s very bad for the bed partner,” he said.
“It can be treated with medications, but they have terrible side effects, most people don’t have that; they go without treatment and live with this awful thing for the rest of their lives.”
Noctrix’s newly released Nidra device features cuffs that wrap around a patient’s leg and provide electro-stimulation to stop twitching.
Noctrix is much smaller than Resmed, currently generating around US$24 million (US$33 million) in annual revenue, compared to around US$5.5 billion (US$7.7 billion) for its new parent company.
Mr Farrell said Resmed had been monitoring the company for years and decided now was the time to buy.
“They are growing faster than us and their gross margins are higher than us, and we can scale them nationally and beyond,” he said.
The Nidra product is similar to Resmed’s continuous positive airway pressure (CPAP) machines, which are used to relieve sleep apnea, including snoring and breathing interruptions.
Both are non-invasive devices and can be obtained with a prescription from a sleep doctor, Mr. Farrell said.
Listed in the US and Australia, Resmed also has some digital products for patients suffering from insomnia.
On Friday, Resmed announced that third-quarter revenue rose 11 percent to US$1.4 billion ($A2 billion), while gross margin rose 2.9 percentage points.
Mr. Farrell said he had gathered more evidence this quarter that Resmed’s Ozempic-style GLP-1 drugs would be a tailwind rather than a headwind for Resmed.
Because sleep apnea is closely linked to obesity, investors initially thought otherwise, leading to a massive selloff in Resmed shares in late 2023 and early 2024.
A pictured follow-up of 1.7 million patients who used a CPAP machine and were subsequently prescribed the drug GLP-1 showed that these patients were five percent more likely to use a CPAP machine after two years.
This is compared to patients who were not prescribed GLP-1 medication.
“There is a correlation. I don’t know the causality or the root cause of it. We have a lot of hypotheses,” Mr. Farrell said.
Weight loss can reduce the pressure needed to keep a patient’s tongue away from the epiglottis and make the use of CPAP machines more comfortable, he said.
RBC Capital Markets analyst Craig Wong-Pan said Resmed’s results were slightly above consensus.
Australian shares fell 4.3 percent to $28.51 in afternoon trading.
Investors may have been concerned about the retirement of Brett Sandercock, the company’s chief financial officer for the past 20 years.
He will be replaced by Aaron Bloomer, who recently held a similar role at cancer diagnostics company Exact Sciences.
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