Mick Farrell
Chief Executive Officer at ResMed
Thanks, Amy, and thank you to all of our shareholders for joining us today as we review result of our June quarter, the fourth quarter of our fiscal year 2021. On today's call, I'll provide a high-level overview of our financial results as well as review progress towards ResMed's 2025 strategic goals. I will discuss execution highlights against our top three strategic priorities and our urgent and ongoing actions to address current industry supply chain issues and opportunities. I'll then hand the call over to Brett for further detail on our financial results.
Let me start with the situation that has generated many stakeholder questions in the last month and half. During the quarter, demand for ResMed's Sleep and Respiratory Care devices surged dramatically after our competitors recall announcement, putting additional pressure on an already challenging environment for our industry's supply chain.
Global supply chain limitations including a shortage of electronic components, as well as ongoing freight constraints and costs are impacting our ability to respond to the unprecedented increase in demand for ResMed products. Executive teams across automotive, consumer product and communications technology industries have confirmed on their recent earnings calls that they are struggling with the same issues.
Some major producers have suggested the chip and electronic components shortages could extend 12 or even 18 months. We are working incredibly closely with our global supply chain partners to ensure access to additional supply of the critical components that we need to further increase production of our medical devices.
During this June quarter, the demand spike was so high that we have been forced to allocate products due to the unprecedented demand and these real world supply chain capacity constraints. In doing so, our guiding principles are very simple. We are focused on the highest acuity patient needs first. It's very similar to our approach to ventilator allocation during the peaks of the COVID crisis these last 18 months.
We will continue to coordinate with all of our stakeholders as the situation develops, and we begin to open up the supply constraints. We understand this is a frustrating situation for all of our customer groups, including physicians, home medical equipment providers, payers, and most importantly the ultimate customer, the patient.
It is a unique time in our industry, with steady recovery of patient flow after COVID-19 peaks in various countries. With these global supply chain constraints and with an unforeseen competitor recall, all occurring simultaneously. I want to be clear that through it all our priority will always be patients, doing our best to help those who need treatment for sleep apnea, chronic obstructive pulmonary disease and other respiratory diseases. Our goal is to ensure that patients get the therapy that they need and when they need it.
Let me be very clear about a couple of things. One, ResMed sleep apnea and respiratory care devices are safe to use. They are the best in the market. They are the smallest, the quietest, the most comfortable and the most connected therapies. And Positive Airway Pressure therapy remains the gold standard for the treatment of sleep apnea.
And two, ResMed will not be able to fill the entire supply gap that has been created by this situation caused by a competitor just 7 weeks ago. They were the number two player to our number one leading market position in almost all of the 140 countries that we compete in worldwide.
We're doing everything that we can to partner further and further up our supply chain in order to increase our access to the supply of the past, the pieces and the components that we need to manufacture at scale. We expect to be in a somewhat supply chain constrained environment throughout fiscal year 2022.
This news from our competitor was only released to the market on June 14. So we are in the first 7.5 weeks of our response. However, we have already partnered with our global supply chain team both internal and external. And although we expect the current quarter and the December 2021 quarter will be the most supply constrained. We do see room for expansion of supply ahead. We expect that the flow of ResMed products will accelerate significantly during the March 2022 and the June 2022 quarters.
We are focused on partnering with physicians, providers and distributors to ensure that our devices get to newly diagnosed patients. And while that human impact is the most important, I know our investors and our analysts need to model the future financial impact of this accelerated growth on our ResMed financials. Based upon our latest supply chain information and analysis, we see a path to $300 million to $350 million in additional revenue in fiscal 2022 over and above our previously planned revenue growth for fiscal 2022.
Importantly, we see a clear opportunity to increase our long-term sustainable market share, as patients, physicians and providers experience our ResMed market leading device and integrated cloud-based software solutions. Our experience over the last 7 plus years since we launched our online platform called Air Solutions at scale is that when providers adopt and embrace our suite of digital health solutions, they can lower their own labor costs by over 50%. They can drive their own patient adherence rates up to over 87% and beyond. After doing that, they don't want to go back to an inferior solution. And yes, during the near distant future, we will be starting the full product launch of our brand new next-generation platform called AirSense 11.
Let me now turn to overall market conditions in our industry. As we discussed last quarter, the countries we operate in are at various stages of the post-COVID peak recovery process in terms of sleep apnea and COPD patient flow. We are seeing continued improvement in patient flow country-by-country. But there is a wide variance in that total patient flow from 75% of pre-COVID levels in some countries around the world to 95% or even 100% of pre-COVID levels in other countries.
Vaccines are steadily rolling out country by country. And at the same time new variants including the Delta variant continue to cause disruption in some geographies. Our team remains committed to working with hospitals and health care providers to provide the ventilators, masks and training that they need for acute care. We will continue to support frontline respiratory therapists and physicians as well as providers, patients and our ResMedian team throughout the 140 plus countries that we operate in.
A few things that have become really clear during this pandemic is that every country in the world has: one, increased its adoption of digital health solutions; two, increased its focus on respiratory hygiene and respiratory health; and three, increased its investments in health care treatment outside the hospital, and particularly in the home. These are all catalysts for ResMed's long-term growth.
We are pleased with the steady progress that we are seeing in diagnosing new sleep apnea, COPD and asthma patients. During the fourth quarter, our sales team delivered very strong revenue growth across our core sleep apnea and respiratory care business. This incredible double-digit growth was despite the headwind from lapping $125 million of incremental COVID related ventilator sales in the June 2020 quarter, and with some tailwinds from our competitors recall right at the end of the quarter.
While I am proud of the team for this 10% constant currency revenue growth in the quarter, I'm also very proud of their achievement over the fiscal year with over 6% growth in revenue throughout fiscal year 2021 to over $3.2 billion in total annual revenue, and with leverage producing over 12% growth in our non-GAAP operating profit and all the while fighting for recovery patient flow and battling COVID-19 impacts. Quite a performance from our team of 8,000 ResMedians helping people in 140 countries.
We expect to see steady improvement in patient flow for sleep apnea and respiratory care therapy as we move throughout our fiscal year 2022. We are encouraged to see patients, physicians and providers adopting digital health tools for remote patient screening, for home-based testing, for patient monitoring and for ongoing population health management. As the leader in digital health for the treatment of sleep apnea, COPD and asthma as well as other chronic respiratory conditions, we are well-positioned to drive this growth with our health care delivery partners.
During the quarter, we generated over $227 million of operating cash flow, allowing us to return $57 million in cash dividends to shareholders these last 90 days. Today, we announced an 8% increase in our quarterly dividend for shareholders to $0.42 per share. We are pleased to return your cash to you, our shareholders, reflecting our confidence in ResMed's resilient business and our ongoing cash flow.
We also increased our R&D investments in digital health technology during the quarter, as well as our research and development for masks, for devices, for embedded device software and for global clinical research. All the while maintaining fiscal discipline with SG&A and keeping other operating costs in line. We are reinvesting for long-term growth.
We lead the field of remote patient engagement and population health management with over 15 million cloud connectable medical devices in the market. Our increasing investments in digital health innovation will ensure that we provide superior value to patients, to physicians and to providers to be their partner of choice. We don't take our leading market share position for granted, we have to earn it every day with every product, every solution, and every service and every customer interaction. Customers vote with their wallets. And right now they are voting for us, and we plan to keep earning their support.
Our digital health technologies are a growth catalyst for our business. We have an exciting pipeline of innovative solutions that will generate both medium and long-term value. With an industry leading intellectual property portfolio, including over 8,200 patents and designs. We now have over 9 billion nights of respiratory medical data in our cloud-based platform called Air Solutions.
We have over 16.5 million patients enrolled in our cloud-based AirView software solution for physicians. And we recently upgraded our patient engagement tool called myAir. This app is now cloud native and serverless in the cloud. This new myAir 2.0 release supports our next-generation platform called AirSense 11.
The AirSense 11 platform comes to the market with new capabilities with improved data delivery, with scalable architecture, and with support for full cycle teams. And what that all means is that we have the opportunity for accelerated innovation in our ecosystem.
We have over 110 million patients managed within our Software-as-a-Service network for out of hospital care. These incredible data assets allow us to unlock value for all of our customer groups, for patients, for physicians, for providers, as well as for private and government payers and the community -- communities that they serve.
Let me now update you on our top three strategic priorities. These are: one, to grow and differentiate our core sleep apnea, COPD and asthma businesses; two, to design, develop and deliver world-leading medical devices as well as digital health solutions that can be scaled globally; and three, to innovate and grow the world's best software solutions for care delivered outside the hospital, and especially in the home.
Last quarter, we previewed our next gen platform called AirSense 11. Responding to the current industry situation, our market leading research and development team accelerated the launch of the AirSense 11. First, by expanding the control product launch to additional customers just this last month. And second by moving to an earlier full product launch date. We now expect to launch in the United States before the end of this current quarter, and then to other countries gradually over time.
This AirSense 11 device launch will be a device launch like no other in the history of ResMed. Previously we carefully timed new product platform launches to minimize the selling overlap of device platforms. We are in a unique situation today. Our market leading AirSense 10 continues to be very strongly adopted, and we believe that it is better than any other device currently on the market.
In short, it makes sense to continue to sell the AirSense 10 at Skype, particularly as this will help maximize the overall CPAP, IPAP and bilevel volume available for our customers for sale given the unprecedented demand for new patients to receive ResMed devices in the market right now.
The bottom line is that we're going to be selling both the AirSense 10 and the AirSense 11 in parallel for quite some time, as we meet this extraordinary market demand over the coming fiscal year. And as we continue to expand the availability of AirSense 11 to new markets and new geographies around the ResMed world.
We are very excited to bring the AirSense 11 to market, and I am understating the results when I say that the response to our control product launch has been very positive. AirSense 11 benefits patients and bed partners and the device and software platform combination will also benefit physicians, providers, payers and overall health care systems.
As I said earlier, we make the smallest, the quietest and the smartest and the most comfortable devices on the market. But they are also the most connected and the most clever devices. All AirSense 11 devices are 100% cloud connectable with upgraded digital health technology to increase patient engagement and inherence to improve clinical outcomes and to deliver proven cost reductions within our customers own health care systems, engaging patients directly in their own digital therapy like never before in the industry.
Let me now turn to a discussion of our respiratory care business, focusing on our strategy to better serve the 380 million chronic obstructive pulmonary disease patients and the 330 million asthma patients worldwide. Our goal is to reach these many hundreds of millions of potential patients with our Respiratory Care Solutions, including non-invasive ventilation, and life support ventilation, as well as newer therapeutic areas such as cloud connected pharmaceutical drug delivery solutions, and high flow therapy offerings.
We announced that our respiratory care business benefited this time last year in the June 2020 quarter as we sold incremental ventilation devices and mass solutions to meet the growing demand for COVID, on an acute scale to the tune of $125 million in sales. During the current June 2021 quarter, we had modest COVID-related ventilator sales. They were not material to our overall results, they were under $20 million in sales, just under.
As the Delta variant of this coronavirus surges in various markets and regions, we will still be there to support governments and health care systems and the patients they serve in their acute need. But we do not expect the resulting revenue from COVID to be material to our global business. Of course, the broader humanitarian impact is measurable with preservation of life through our ventilation solutions, a top priority in all of these countries.
Our supply chain focus is for Astral, our life support ventilator, then Stellar, our non-invasive ventilator, and then our Lumis and AirCurve platforms to ensure that we can help patients who need our support the most.
Demand for our core, non-invasive ventilation and life support ventilation solutions for COPD are experiencing the same steady recovery and new patient flow as we see in our sleep apnea business. We are balancing the growth in demand with the supply of ventilators that made it to market throughout the last 18 months as customers balance their inventory with ongoing acute and chronic ventilation patient needs.
We continue to see rapid adoption of the AirView for ventilation software solution that we launched in Europe this time a year-ago. We are now expanding this technology to regions around the world. The value being provided through AirView for ventilation has been helpful to physicians not only during the COVID crisis, but it is also increasingly valuable as an ongoing clinical tool for them and for the health care systems that they operate in. In summary, we are helping to ensure that digital health is the new standard of care for respiratory care.
Let me now review our Software-as-a-Service business for out of hospital health care. During the quarter, our SaaS business grew in mid-single digits year-over-year across our portfolio of markets, including home medical equipment, skilled nursing facilities, home health, hospice, private duty home care, home infusion, and life plan communities. The continued growth of home-based care is providing tailwinds for our HME and home health products.
And we continue to grow with customers as they utilize and optimize our resupply solutions to improve patient care. The COVID-19 pandemic has been challenging for some verticals in our SaaS business, particularly skilled nursing facilities, or SNFs. However, we are seeing positive trends as census rates improve across SNFs, and other care settings. We are watching this very closely as COVID peaks in the case of varying rates around the country. We expect there to be pent-up demand for our software purchasing that provides opportunities for us to increase our pipeline as COVID restrictions continue to ease state-by-state.
Our leading position as the software provider of choice to the HME market enabled us to help customers manage through the pandemic and to maintain a healthy business. Our Brightree branded software solutions are allowing HMEs to work through current challenges within our industry, including the need for increased patient support, the need for management of product shortages in some categories, as well as ongoing growth in the resupply of much needed home medical equipment.
As we look across our portfolio of solutions, we expect our SaaS revenue growth to gradually accelerate increasing from its current mid-single-digit growth to high single-digit growth by the back end of this fiscal year. As always, our goal is to meet or beat these market growth rates as we continue to innovate and take market share from competitors.
Additionally, we see opportunities on our radar screen to drive growth through further SaaS acquisitions to augment our existing organic growth. We have a good history of thorough due diligence, ensuring that ResMed is the best owner of the asset. And of course, that we can bring additional value for our customers with the new offering, and of course additional value for all of our shareholders.
In summary, our SaaS offerings are well received in each of the verticals that we serve. And we see an increasing opportunity to leverage analytics to minimize acute care episodes for residents, patients and clients in our provider network. And ultimately, to allow people to age in place, away from a hospital and preferably in their own homes.
Looking at the portfolio of ResMed's businesses across both sleep and respiratory care as well as our SaaS solutions, we remain very confident in our long-term strategy and our pipeline of innovative products and solutions. Our mission and specific goal to improve 250 million lives through better health care in 2025 drives and motivates ResMedians every day.
The light shining on the importance of respiratory health and hygiene is brighter than it ever was due to this pandemic. COVID has also highlighted the importance of digital health, it's accelerated awareness and adoption of technologies that can be used for remote patient screening, diagnosis set up as well as patient monitoring and management.
We continue to invest aggressively in R&D to ensure ResMed solutions remain market leading and provide a catalyst for long-term growth. With over 1.5 billion people around the world suffering from sleep apnea, COPD and asthma, we see incredible opportunities for greater identification, enrollment, and engagement of people within our digital health ecosystem. We are relentlessly driving innovation and development to provide the scale needed to expand the impact of this technology across all of the 140 countries that we operate in.
Before I hand the call over to Brett for his remarks, I want to again express my sincere gratitude to the more than 8,000 ResMedians for their perseverance, hard work and dedication during the most unusual, almost perfect storm of circumstances. You have helped save the lives of many hundreds of thousands of people around the world with emergency needs for ventilation these last 18 months as we suffered through COVID. And now you have rapidly pivoted the company back to provide ongoing support for our customers and patients during very challenging industry dynamics and supply chain constraints with unprecedented demand. Thank you.
With that, I'll hand the call over to Brett in Sydney and then we will go to Q&A with the whole team. Brett, over to you.
