San Diego sleep apnea device maker ResMed cuts workforce, restructures executive team – San Diego Union-Tribune

Local medical device maker ResMed is adjusting its executive leadership assignments and cutting back its workforce to accommodate a shift in strategy. The San Diego-based company is pushing to improve its current product marketing and digital health offerings for the future.

Since the 1980s, ResMed has been a leader in health technology for treating patients with obstructive sleep apnea and other respiratory conditions. Its continuous positive airway pressure, or CPAP, machines help people breathe consistently while sleeping.

ResMed is a market leader in this space of out-of-hospital devices and in recent years has invested more in developing cloud-connected devices that work with smartphones.

To refocus its long-term mission, CEO Mick Farrell announced a 5 percent workforce reduction during ResMed’s most recent earnings call in late October.

The company is cutting 364 jobs in San Diego County, according to its Worker Adjustment and Retraining Notification Act (WARN) filing with the state. ResMed employed more than 10,140 people globally as of June 30, according to its annual financial report.

Farrell told investors the company has also “stopped some projects that were not working out as well as we thought.”

“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,” Farrell told investors.

A few weeks later, the company announced it was shaking up its leadership model to emphasize product, revenue and marketing for its long-term growth. The executive team reporting to the CEO has also expanded.

Those changes included appointing Justin Leong, who previously served as president of Asia and Latin America, to chief product officer. Katrin Pucknat, who was ResMed’s president of Germany, will serve as chief marketing officer. Lastly, Mike Fliss will be chief revenue officer after serving as vice president of North America sales.

Two chief executives will depart their positions but remain with the company for about one year in advisory roles. Rob Douglas, current president and chief operating officer, who has been with ResMed since 2001, will retire in the new year and transition to advising the CEO until the end of 2024. Urvashi Tyagi, ResMed’s chief technology officer since February 2022, will serve as an adviser into the new year and a consultant through next year.

Analysts say ResMed’s latest attempt to strengthen its standing as market leader is opportune given its key competitor, Phillips, has been stymied for more than two years. Phillips’ respiratory devices for sleep apnea were recalled in 2021 and have not returned to the market in full force.

Overall, the analysts expressed positive sentiments that ResMed’s strategic decisions could result in positive returns for the company in the long run. Unlike in the past, ResMed is investing heavily in generating demand for its products as seen in the three new executive positions, said William Blair analysts in a research note.

“The company has historically invested in some of these efforts, though on a local basis; by centralizing the functions, it should allow the more successful efforts to scale on a global basis,” the analysts wrote.

The William Blair analysts also note that ResMed’s increased adoption of digital infrastructure to its devices, like a corresponding phone app, has led to record levels of adherence and utilization of its products. Part of this connects to a number of acquisitions in the digital health and respiratory care space that ResMed has made since 2021.

Originally Published: December 4, 2023 at 8:08 PM PST