Afternoon, everyone. Welcome back to the afternoon sessions. My name is David Low. I cover healthcare out of Sydney for JP Morgan. With us this afternoon, we have ResMed CEO Mick Farrell. Mick's gonna present for about 20 minutes, and then we'll do 20 minutes of Q&A. Quick reminder, they're in the digital conference book if you'd like to ask questions online. There will also be a mic, and it's probably easier to use the mic if you're in the room. Over to you, Mick.
Great. Well, thanks, David, good afternoon all. Go through the disclaimers there from our legal team. What's ResMed? ResMed stands for respiratory medicine, ResMed also stands for residential medicine, treatment and care where you live and preferably in your own home. Our total addressable market includes our core market of sleep suffocation, as I call it, or sleep apnea, as the physicians call it, which is around 940 million people worldwide.
It also includes chronic obstructive pulmonary disease or lung disease, which is 480 million people worldwide. We've added on some capabilities in cloud-connected inhalers for asthma, that's 330 million people worldwide in that addressable part of our market.
Most recently in the last quarter, we bought an app for insomnia treatment, called somnio from a company called mementor in Germany, riding some of the digital health applications deeper and deeper in the German market, and that's 880 million people worldwide who have difficulty getting to sleep. If you add all that together, it's 2.5 billion people, around 30% of the world's population that is treated by one of these four very prevalent and chronic diseases that ResMed is looking to treat.
One of the things I'll talk about as we go through this presentation is our focus on data, and particularly big data, taking 12.5 billion nights of medical data that we have in the cloud and looking to extract value for customers, whether they're patients, providers, physicians or across the board. This slide highlights two studies that we've recently peer reviewed and published.
The one on the left-hand side of your screen called the ALASKA study. I don't know why it's called ALASKA. These key opinion leaders take those little acronyms for it. It was done in France, they used a U.S. state, it's 170,000 patients. What it showed is patients who are on our therapy or CPAP adherent therapy versus patients who are non-adherent to CPAP.
They found a delta within 365 days of 39% in mortality difference. An increase of 39% survival for patients on our therapy. I've been with the company, 22 years, and we've always said internally that our treatment, CPAP, is a case of life and death.
I can now say definitively it is, with N equals 170,000 behind that. In addition to saving lives, our therapy also saves money, and saves on chronic disease development. Two stats up there, we saw a 25% reduction in the incidence of hypertension and a 23% reduction in the incidence of heart failure amongst the CPAP adherent group. We can go on in terms of costs.
The study on the right-hand side of the screen, again, looks at those 12.5 billion nights of medical data and overlaps them now with, available medical data in the U.S. We were able to show, you know, the left-hand side of the study's in France and the U.S., we're able to show within the first year a reduction of over $3,000 per patient in the study in terms of total medical costs.
That's well below the cost of diagnosis and treatment with our therapy. The payback period, less than 365 days. And addition reductions in hospitalizations and ER visits. What are the global trends and why do I think that that total addressable market that we're after is sustainable and addressable and a big opportunity going forward?
Well, none of these things, like Jamie was just talking about there over lunch, these are trends that are global. We are seeing chronic health diseases, chronic disease management become one of the biggest issues. It's 80% of the total costs of our sick care system worldwide.
It's not truly a healthcare system because we wait till you're really sick with a chronic disease, and then we treat you in expensive high-cost areas like ERs, ICUs, CCUs, and emergency rooms. Our aging population and the increase of that chronic disease is a trend that just continues. We're increasing our healthcare spend as a percentage of GDP. We're here at a healthcare conference. We don't want that to keep going up. That's not sustainable. Here in the U.S., it's 18%, 19%, almost 20% of our GDP.
One in five dollars of the economy is spent on healthcare. It's not sustainable that that grows faster than the economy, but it is doing so. Similarly in Western Europe. Labor costs, I mean, not just in this 7% inflation environment, but even before that, labor costs in healthcare have been skyrocketing over and above other industries.
Staffing shortages, it's hard to find people to work, whether it's in respiratory therapy or just in the general healthcare system. There's an ongoing need for care where people live outside the hospital. Actually, I think in these last two years, this is the first time. By the way, it's great to have an in-person audience here. This is so much better. The last two years I was staring at this little blank screen in my home office.
Thank you for people for being here. What we noticed in that awful crisis is that, yes, you can run a public global company from your bedroom. Like, there are some amazing things you can do in terms of digital health, remote health, remote hygiene. One thing we did find is that the importance of respiratory diseases and respiratory hygiene was taken to another level.
People realized a communicable disease like COVID can kill you, and therefore diseases like lung disease, COPD, a respiratory disease, or sleep apnea, a respiratory disease, are more important. We saw rates of people even just renewing their masks and tubing and accessories on terms of respiratory hygiene pickup at a secular rate, and that stayed that way since then.
The digital health trend, the ability to get screening, diagnostics and treatment for not just sleep apnea, but many chronic diseases in the home has really picked up. We think that those trends of digital health, respiratory health and hygiene, and treatment outside the hospital are ones that have been proven during COVID and will only accelerate as we move forward.
What's our strategy to address this? Well, look, we believe in a patient-centric future. We believe in a digitally enabled future, and we believe... It actually looks modest when you think of the 2.5 billion patients I talked about, we believe that we can change over a quarter of a billion lives in the year 2025.
In the last 12 months, we changed 144 million lives, giving someone either a device, a CPAP, an APAP, a bilevel, a ventilator, or a full mask system or an app that they were using to treat their COPD, their asthma, or their insomnia.
We wanna increase that volume at double digits every year through 2025 so that we can touch and improve 250 million lives by 2025, not just in our core market of sleep apnea, but also in COPD, asthma, and other chronic conditions like insomnia. In addition to that, we have a software as a service business that I'll go into in quite a lot of detail later on in the presentation that talks about how we are running software for out-of-hospital healthcare.
We're not trying to compete with an Epic or a Cerner, we are sort of becoming a little bit of the Epic or the Cerner or the Allscripts for out-of-hospital care, whether it's in a skilled nursing facility, home health, hospice, private duty home care, life plan communities, and home medical equipment and beyond. How are we gonna execute on that strategy?
A big part of it is our investments in digital health. If you think about it, those 19 million devices that we have in 140 countries are cloud-connected nodes in a digital health ecosystem. Every day, every morning, someone wakes up from their CPAP, their data go to the cloud. Often they get it themselves on their own app.
They check it, and the gamification, if you like, almost like the TikTok approach or the Instagram approach of addiction of social media. I like Jamie's point there around please get off it if it's too addictive. In the digital health overlap with that gamification, we're able to drive incredible engagement of our patients with their care through the myAir app. We actually see that when you combine a patient on myAir, the digital health app, a doctor using AirView, which is our cloud-connected system that doctors can access their patients' data.
We see adherence rates go from sort of typical industry, pharmaceutical or med tech industry adherence rates of 50%, 60%, which is what you see in the peer-reviewed literature in the last 20 years in sleep apnea. We increase that to 87%.
We get almost nine out of 10 patients wearing our device for the whole night, and that is by far and away ahead of any of the competition in our space. Even when I present at healthcare conferences, I have folks from my fellows over at pharmaceutical companies say, "I would love to be able to achieve 90% adherence after a prescription of my inhaled pharmaceutical.
Can you do that with your Propeller app?" We think we can. We think we can apply all that learning from sleep apnea over to COPD, and I'll talk about that a little later in the presentation. This slide also shows that not only those 19 million nodes and the 12.5 billion nights of data, but also the knowledge that we have of patients in out-of-hospital healthcare and how we can seamlessly manage patients through those episodes of care and help a healthcare ecosystem track the patients, improve the patient's outcomes, lower costs, and provide better long-term longitudinal care.
The three, you know, main things we're trying to achieve is obviously patient outcomes that we're gonna improve the not only their quality of life, but their quantity of life. Business outcomes, we're gonna lower costs for our customers.
We see that when our digital health solutions are used, our home medical equipment company customers have labor costs that are 50% below what they were before they were using our digital health solutions. There's also operating efficiencies that we're gonna bring to the global healthcare system, like I talked about, the $3,000 reduction within the first year of patient on therapy.
These numbers are pretty impressive. They go up every day. We report them every quarter, 12.5 billion nights of medical data. We have now over 20 million patients on our AirView cloud-connected system. I think an interesting part of this is actually the patient-driven one, and it accelerated during COVID, as I said, 5 million patients looking at their data on their app and getting access to it.
By the way, we provide patients access to their data for free. There's a lot of these talks around, you know, who owns the data. The patient owns their data. We are stewards of those data, and we're stewards of cybersecurity, of interoperability, and ensuring that those data are available for that patient. It's an amazing response you get from patients being able to see every day their score out of 100 for how they slept.
You know, people are competitive often with themselves on their golf scores or their tennis game. We like to have people competitive with themselves on their sleep and their breathing, and it works. What, what are the priorities that drive our focus, and what are the outcomes we're looking for? Well, I talked about the patient outcomes, but our triple aim is pretty simple.
We wanna slow chronic disease progression, whether it's a reduction in blood pressure, a reduction in the incidence of heart failure, as I talked about from those studies, a reduction in HbA1c, an improvement in diabetic control, a reduction in body mass index for a patient who's getting treatment and has better participation in exercise and so on.
Secondly, we wanna drive a reduction in the overall costs to the healthcare system. We believe that health economics and outcomes research that we have through our big data differentiate us from other players because we're able to prove that we lower costs to a healthcare system by overlapping our data with the healthcare system's own data. Thirdly, and this is really important, and sleep apnea is one of the few industries where you see this.
You don't see this in hypertension, but we see a symptomatic relief in the patient. They feel better, not just in the morning, but throughout the day. I think that quality of life improvement is a really important one that's been a catalyst for our business and will be for not just sleep apnea, but COPD, asthma, and insomnia. We bring symptomatic relief.
Let me walk really quickly through our sleep and respiratory care business. I see I've only got seven minutes before we want to switch to Q&A, I'll speed up a little here. Our vision is to create a digital end-to-end experience for patients throughout the value chain. We wanna improve the patient experience through digital care. We just launched our 11th generation device, the AirSense 11. It has coaching capabilities. It has two-way communications.
A doctor can communicate with a patient. An AI ML algorithm that we've created can interact with a patient to drive therapy adherence. We can have over-the-air upgrades. If we need to upgrade software, we can do it. We can provide interaction that way. Our goal is to drive long-term adherence to 90% and above. I talked about a peer-reviewed published article that we have 87% adherence that we did with Kaiser Permanente.
I would like to see that 90% across the board with every payer and every provider. We're not there yet, but we can get there. We need to lower the cost of delivery of care, improve health outcomes. Most importantly, we need to show this through economics and through the quality of life of patients because they will make a sustaining business for us and for our customers.
You know, people say, "Are you done? Is it the smallest, quietest and most comfortable device on your 11th generation? Are you done?" Well, it's not just now about being smallest, quietest and most comfortable. It's about being the most connected and the most clever.
I think the opportunity for us to leverage artificial intelligence and machine learning, not just in the little algorithms of gamification on myAir, but to really look at the whole healthcare ecosystem to see where we can improve. We lose a lot of patients through the funnel, even just from the screening, diagnostics, and therapeutic pathway. We measure adherence from the prescription through to 90 days of therapy.
I think we should measure adherence from, "I think I have a breathing and sleeping and snoring problem from my bed partner," and how many of those patients actually get through to adherent therapy. It wouldn't be 87% to get through there. It'd be more like 15%. Where do we lose those 85% of patients in the funnel?
How can we make systems and capabilities that can better digitally curate a patient from, "I think I have a problem," to knowing, "If I don't treat this problem, I have a 30%, 40% higher chance of death." That's a good incentive. I can you know, have a better capability to participate in life in my, in my vocation, in my family, and have a better quality of life.
We've got to work on those, and we've got to bring them to the forefront. One of the big opportunities on the, on the payer side that we have is in our second disease state that we treat, chronic obstructive pulmonary disease.
There's over $1.5 billion-$2 billion per year in the U.S. on readmission costs for COPD. COPD is the number two reason for hospitalization after cardiovascular disease, but it's the number one cause of rehospitalization within those 90 days.
We see payer provider systems starting to pick up on that. We know that we can be a catalyst for reducing those readmissions. I've talked about this unlocking value across the value chain. I won't go into details on that. Our SaaS business, I'll cover this in five minutes, and then we'll go to Q&A.
We'll have at least 12 minutes on that. Our software as a service business includes three main brands, Brightree, MatrixCare, and our new addition this last quarter, MEDIFOX DAN. Brightree, think of it as an ERP, a software as a service for all home medical equipment company needs. Think of it like an Oracle or an SAP or better than those. You know, a combination of those plus Bloomberg for the HMEs. They get in, they turn on, and it runs their business inventory, interaction with, payers, providers, revenue cycle management, and so on.
Brightree also includes pharmacy and infusion. MatrixCare has a number of verticals from skilled nursing facilities, home health, hospice, as well as private duty home care, and even life plan communities where aging populations are.
Our most recent addition is MEDIFOX DAN, which is based. By the way, Brightree and MatrixCare are all U.S.-based. MEDIFOX DAN is German-based and is focused around home nursing, home health, but also nursing homes, so some facilities there as well. We're the number 1 strategic player in the world in out-of-hospital Software as a Service. This combined business is around trailing 12 months, around $400 million in revenues and growing very high single digits. We think MEDIFOX DAN, we know MEDIFOX DAN will be accretive to not only our SaaS business growth, but also ResMed's total growth and our EPS in this first year of the acquisition here in 2023. I'll just give one example.
People say, "Look, how does the sleep and respiratory care med tech or digital health med tech business interact with the Software as a Service business? Are there any synergies?" There are obvious ones on the back end with Cloud Ops, cybersecurity, and interoperability, but there's some front-end synergies too.
One of the main ones is if you think about home medical equipment companies and their focus on replenishment of patients on our core therapy of CPAP and APAP and bilevel, where there's needs to replenish the device every three to five years, the mask every really three to six months, and many of the other accessories.
We have a product called Brightree ReSupply, which completely automates the process, contacts the patient, interacts with the insurance company and with the patient on co-pays and manages the whole logistics and distribution process.
We also made an acquisition of a competing technology called SnapWorx that has even pushed that further with the way that it interacts with patients. We actually closed the Snap acquisition just before COVID, and we put it into place, and the timing was really good for our customers because patient flow through device setups really slowed down in 2020 and 2021 due to the COVID impact on out-of-hospital care and all patient care across the board. Resupply was a way for our customers and patients to have more engagement.
We saw incredible doubling of the flow of replenishment to the needs of patients during that time. Home medical equipment is not the only part of our out-of-hospital ecosystem that's growing. We believe that all of these verticals that you see on the screen here are going to increase in their number of patients and the number of treatments that happen through them. Hospitals are great places to be if you're incredibly sick with incredible acute needs.
For the other 95% of healthcare, we believe you should be treated in the home or at least where you're living. We are investing 90%-95% of ResMed's revenues and profits come from outside hospital healthcare. We believe that's the future of healthcare. We're investing big there, and we expect good returns.
Speaking of returns, this is our really quick snapshot of our five-year CAGR. We've got a five-year CAGR of 11% on revenue. These are trailing 5 years and on EPS, with strong leverage there of 400 basis points at 15% CAGR on non-GAAP EPS.
I think actually, if we could switch to the Q&A section, I'll invite our President Chief Operating Officer, Rob Douglas, and our Chief Administrative Officer, David Pendarvis, to the stage, and we'll just take questions now. I'll close with this. 144 million lives changed in the last 12 months. Our goal, volumetric growth, double digits all the way through 2025 and beyond to get that to 250 million lives changed in 2025.
Thanks, Mick. Good job. Kept it just over 20 minutes. I'll start with a question, but if you'd like to ask a question in the audience, there is a roaming mic. There's also the opportunity to put a question onto the digital conference book. Mick, maybe just one that's, you know, given recent history, can I get you to talk a little bit to the supply chain?
I mean, supply has been a constraint for the sleep business. Now, there are multiple reasons for that, but just how are you seeing things at the moment? Is COVID in China, you know, an issue that we should be worried about as well? If you could just elaborate a little there, please.
Well, I'll start, and then we have our Chief Operating Officer here, who can talk about all the work we've been doing. Yeah, supply chain, obviously, you know, huge impacts the last 24, 36 months through COVID, particularly in electronic components, semiconductor chips, communications chips specifically. We've been able to, you know, I think weather a perfect storm through COVID.
We had the implications of the COVID slowdown of patients and then coming back, and we had the implications of semiconductor crisis and coming back. We also had a competitor recall that's been going on for the last 18 months of 5.5 million devices in our space that a competitor has, you know, spent the last 18 months plus, 'cause they're not back in market yet, working on.
That drove incredible excess demand for us, and we had to perturbate our supply chain, you know, amidst that perfect storm. I think the team's done a really good job, and we've been able to grow double-digit, you know, for quarter-on-quarter for each of the last six quarters.
Very strong double-digit growth to meet as much of the demand as we can have out there. There's still excess patient demand, and we see that as a humanitarian emergency, and we're doing everything we can to source more and more semiconductor chips, and we're having some good success. Rob?
Yes, absolutely. In fact, we should be very good customer for the semiconductor industry 'cause we're predictable and we can forecast our volume increases, and we see the patient inflows years out. Part of the things we are doing are extending our commitment times with them up to many years. In fact, our normal setting, you know, we know the electronics industry is always feast or famine, and they go through these cycles.
Our typical inventory settings and risk management policies would have seen us through even this one had not we had a competitor drop out of the market, and all of a sudden, we had a 50% increase in demand. We saw the suppliers actually help us then. Some gave us some commitments, not all of what we needed.
We saw decommits come through as other demands came through that had more guess clout with the semiconductor manufacturers. That seems to have settled down. You know, the consumer product demand has dropped off a bit, but our technologies are more in line with what the auto industry demands.
We're really competing for supply capacity with the auto industry. As that looks like it's not got great volume growth for short term ahead of it, that should help us as we go through. There was also a commentary around the impact of China. At the moment, you know, China's been a challenging thing.
Actually when we early in the COVID pandemic, when we saw the depth of our supply chain through so many countries, we realized some of the risks that we were taking there, and we put some things in place in there. We're less reliant on China, particularly for tier one suppliers and maybe you might expect us to be.
Also what's happening now in China with the, you know, the rapid movement COVID going through, and even in our own teams that are operating there. We've got a really good business in China. You know, most of that team have had COVID in the last few weeks, so, but what do we think is happening in the suppliers is that, yeah, they're getting affected by COVID in their teams, but it's not lasting that long.
Given the current configuration of inventories and that, doesn't look like it's gonna be a problem for us in China.
Yeah. The net is we're seeing increase every quarter sequentially in our ability to supply more and more devices and take care of more and more of that unmet demand. We're getting closer and closer to meeting total market demand. We're not there yet, but every quarter, every month, every quarter, we're getting better, and we're gonna see sequential growth throughout the fiscal year and beyond.
Great. If there are questions in the audience, just please raise your hand. We've got one here at the front.
Row one and row five, it looks like.
Just a quick question. How do you compare your CPAP solution for apnea to the implants?
The question, if you didn't hear it online, is how do you compare CPAP therapy to implantable therapies for sleep apnea? I'll take the question even broader and say, how do you compare CPAP treatment to all substitute therapies, all others that may be there? I would actually say CPAP is number one. The backup to that is APAP.
The backup to that is bilevel PAP. There are three layers of actually positive airway pressure therapy that'd be my first three lines of defense. All of which, when used appropriately, can get your apnea-hypopnea index or your suffocation index below five to normal territory. If you fail on that, right? We... You know, I was bragging earlier that we get to 87% adherence, which is amazing. Round it up, call it 90% adherence.
That means still 10% of the patients that we go through that whole process with aren't adherent on our therapy. I think for those who fail positive airway pressure therapy, the next line of defense would probably be a 3D-printed dental device, such as we have a product called Narval, which is the number one provider in Western Europe and Northern Europe. It's almost as effective as CPAP. Not quite as, but it's almost as effective, and that'd be the next sort of clinically most effective therapy .
If you'd fail CPAP and APAP bilevel and then dental, I would say probably the next substitute therapy coming down the pipeline is gonna be a pharmaceutical treatment. A company called Apnimed out of Boston has just presented their data. We're an investor in Apnimed.
That has, you know, for around 47% of the patients, about a 50% reduction in apnea-hypopnea index, it's able to do that with a pill for some of the phenotypes of patients. If you failed all those four lines, I think surgical, you know, at a very high cost, $20,000 plus cost, would probably be the third or fourth line of therapy.
We're an investor in a surgical opportunity called Nyxoah, I know there's another public company out there now in that space as well. I, you know, I think it's, they'll all be niche therapies 'cause they're not as effective, and they're more costly than the positive airway pressure therapies. Thank you for the question.
Thank you. I'm a big nerd, basically, since we're in Silicon Valley, it's actually very refreshing and exciting to see all the advancement of your business in SaaS, AI, and big data. My question is, compared with other big tech companies in Silicon Valley and other big med tech like Medtronic, Boston Scientific, who are just starting their AI initiatives, what's ResMed's unique advantage on AI, machine learning and SaaS compared with tech and med tech companies? Thank you.
Yeah, no. It's a very good question, and I think, you know, you've got to know what you're the best in the world at and what you're very good at. What we're best in the world at is treating respiratory medicine and doing residential medicine.
Sleep apnea, COPD, asthma, insomnia, as well as, you know, software for out-of-hospital healthcare, HME, home health and hospice. We have the highest number of medical devices that are cloud-connected on the planet. I love my friend Mike Mahoney, but I've got more cloud-connected devices than Boston Scientific. We do. We've got 19 million-20 million 100% cloud-connectable medical devices, 12.5 billion nights of data. Big data is useless on its own.
It has to be extracted to create value, and that's what you're talking about, AI and ML, and our ability to convert those big data into actionable outcomes for a patient, for a provider, for a physician, or for others. I think digital health is a marathon, and I think we're in mile one or kilometer one for those listening from Asia, Europe.
We've got a long way to go in this. I can tell you, we are ahead of our competition in our space. We're engaging with other companies. In Silicon Valley, we partnered with Alphabet's company, Verily. We have a joint venture called Primasun. We're combining, you know, Google engineers and their capabilities with, you know, a seamless end-to-end pathway for sleep health and sleep and respiratory health.
We're also working, you know, with the AI and ML providers directly within our data, and we're hiring our own. There's a long way to go in this, and I can tell you that already that we have algorithms running and encouraging patients to use their therapy. It's just the start of where we're gonna go with this. I think there's so much we can do to lower costs, improve outcomes, and find interoperability across the value chain. Dave, did I miss anything on that?
No. I think you got it, but it's certainly the case. One of the unique aspects that we have is we're not just relying upon our analytical capabilities. As Mick said, we have our own datasets within our specialized fields. We have both the hardware that continues to collect the data as well as the algorithms that can then derive the insights in that data. Having that combination of your own proprietary datasets is probably the main advantage that we have to use those tools with that.
Yes. Thank you. Not only you have impressive big data strategy, you also have impressive data to back up that strategy.
Right. Right. A lot of people have the strategy without the data.
Any other questions from the floor? All right. Another one from me then, for the team. I mean, Philips has obviously had a recall, and that's been a pretty dramatic event for the industry. Can I get you to talk a little bit about how you're planning for Philips' return?
Well, you know, I think there's many scenarios. In June 2021, when they announced this recall, they said they'd be back in the market June 2022. In September 2021, they said they'd be back in September 2022. Then in December 2021, they said they'd be 90% done by December 2022.
I haven't seen an update, but presumably, they've produced 90% of the devices, but they're not back in market. I checked with the sales team yesterday. They are not back in market. The way I look at it is it's not irrelevant, but it's not as important as it was because we're able to increase our supply every week, every month, and we have just finished a construction of a plant.
We just opened it last quarter in Singapore, in Tuas. This manufacturing facility is the biggest on the planet for respiratory medicine. We have the ability and the capability in that plant to take the whole of the market's needs for production. As we ramp up our capabilities with the semiconductor chips, we'll be able to take more and more of the demand that's out there.
You know, you could run a scenario that they're back on Monday, February 1st, let's say, or 2023, or July 2023, or February 2024. I don't know when they will be back. Neither of those matter because they've got to start from zero share of new patients and work their way back in.
The number two, three, and four players have taken some of that sort of second-tier play, and they will go and fight for that share at the start and come in. We're not gonna have a problem with demand over the next six, 12, 18 months.
When we do have good competition, and they're solid, and they're growing with us, then we can start to turn on some of that demand gen, like the Verily JV, which is looking to digitally screen and pull patients through. We also have our omni-channel approach in Australia, Singapore, Korea, and U.K., where we're able to work with the ability to drive patient demand gen from the consumer level, sleep-concerned consumers into the channel.
We've been experimenting a lot during COVID, and a lot of really interesting pilots and capabilities to drive patients through, but we haven't turned up any of those dials of demand generation. We've actually been holding teams back from going live from pilot to large scale trials.
That's very interesting, Mick. I mean, maybe just before we go into demand generation, can I get you to talk about the patient backlog? I mean, we've had some of your customers talk about 900,000 patients in the backlog, but more recent conversations suggest that those patients who are truly waiting for a device have been addressed pretty quickly in recent months. What do you think is the patient backlog? Does it mean there's a period ahead where we have above normal demand?
Look, yeah, we've certainly got excess patient demand above our ability to supply right now. I think the way I think of it is for a person. You know, imagine it's your father, your mother, your family relation. How long from the time they get that prescription for this life-changing therapy that'll save their life by 39% mortality reduction a year, how long from that prescription until they actually get delivered a device to their own home that's set up and ready for them to go? In some parts of the world, it's like 8-12 weeks now. You imagine? You've got a really important condition, but we'll see you in three months. It's just wrong.
Our goal is to bring that back down to where it should be, which is in the weeks, not months, time approach. We're ramping up supply every day. The excess patient demand is there and will be there for the coming six, nine, 12 months. Every month and every quarter, we get closer to meeting all that demand. Rob, anything to add?
Just it's different situation, different markets, David, around the world. In other markets, some of the patient waiting lists are much longer still. We believe that we've got a lot of work there. We suspect that actually very few people who've basically had their machine for its useful life have been, what we would say, repapped or resupplied with the device, over the last 18 months. There'll be a big backlog in there as well. We're gonna have excess demand for quite a while.
Okay. Questions from the floor? If you would like to ask a question, please raise your hand. Mick, another, you know, perhaps a pretty standard question, but in, you know, we're in a new inflationary environment. You know, my experience and my memory of ResMed is pricing is traditionally been deflationary. How are you managing this new higher cost environment? What are you expecting on pricing? Dave, I'll get you to step in with a comment on reimbursement and, you know, where Medicare's ended up, please.
I'm happy to hand to Dave right away to answer all parts of that question.
I'd say you're right. Traditionally, the model with our business, which with a lot of med tech business, has been pricing comes down a little bit incrementally year to year. We're able to drive costs down incrementally year to year and basically preserve your gross margin at roughly the same level. The world's been crazy for a lot of reasons the last couple of years, and inflation has certainly been one of them.
Our supply chain disruption has been another. We haven't been in that environment, but we have been in an environment where our customers from, at least in the U.S., it's the most obvious, you've got an inflation adjustment to Medicare reimbursement. That's given our customers January 1 of this year about a 7.8% on average increase.
That's enabled us to maintain our pricing relatively flat. We also introduced a surcharge last year. What's gonna happen in the future? I mean, mainly, we wanna work with our customers to make sure that we're giving them fair pricing, and we wanna make sure that we're in return giving fair pricing, and we've been able to do that. I can't really predict that pricing is gonna go up.
Not sure that I'm gonna predict pricing is gonna go down. That's gonna be the product of a lot of individual discussions that we have going forward. We do expect that we're gonna be in a environment where pricing is more benign as an environment. Certainly, we're delivering a lot of value with the products we have.
The goal is to take the card-to-cloud device and obsolete it, and then ultimately obsolete the AirSense 10, and then only be selling the AirSense 11. The AirSense 11 has a good margin profile for us and has the highest pricing on the market right now and is delivering the most value. Obviously that's a long-term journey to get to where we've standardized on that product variation, that would be the long-term goal, and that'll be helpful for us from a margin perspective.
The other thing I'd add is that for our SaaS business, we usually have an annual price increase that we paused somewhat during COVID, because we're providing such extra value to the customer, we're able to increase prices, usually on our Software as a Service part of our business. There'll be some increases there.
Mick, I think that's a good segue. I mean, SaaS has been, you know, a little bit slower and again, there's some good reasons why. Maybe if I could get you to remind us quickly as to why growth did slow and what we should expect over the next couple of years on, from that business.
Sure. Well, you know, actually the Brightree part of our business really didn't slow that much. Maybe a little bit during COVID, but not that much because digital health solutions were even more needed in a COVID-related world when you're in the home medical equipment industry. They did slow a little bit in the MatrixCare part of the business 'cause skilled nursing facilities and hospice census rates were drastically reduced during COVID due to the flow of the virus in 2020.
Those census rates are starting to come back, and our MatrixCare business is really starting to grow again. You know, you saw over the last couple of quarters, we were able to turn from low single-digit growth to mid single-digit growth to now high single-digit growth.
In the September quarter, we had north of 8%, 8.5% growth of our SaaS business year-over-year. I think those high single digit growth rates are really sustainable in our high margin software as a service business. We've just closed on MEDIFOX DAN acquisition, and that'll be even accretive on top of that to revenue growth as well as EPS growth for the company.
Okay. Last opportunity to ask a question from the floor. No? All right. One more from me then. card-to-cloud device. I mean, you mentioned it and you obsolete it. I mean, can I get you to talk a little bit about where that device was sold, and then over what timeframe do you think that gets taken out of the market?
Yes. For those in the audience who don't know, we pivoted a little bit during this crisis where you couldn't get communications chips. We took our last generation device, the AirSense 10, and took out the comms module. We have an SD card that can then be put into a card reader and send the data to the cloud. We call that the AirSense 10 card-to-cloud. We pivoted on that in the June quarter and the September quarter, and we had pretty good success, primarily in the U.S.
We didn't have as much success in other countries because sometimes we'd work to change the reimbursement system. Like in France, cloud-connected devices are reimbursed at a higher rate than non-cloud connected ones. It's hard to have people pivot to something they're gonna get paid less for.
We did somewhat, but we did it much more in the U.S., where also there was an environment where home medical equipment companies knew how to do. They had the card readers. They'd done it from 2000 to 2014 with our devices card-to-cloud. They're able to pivot there.
We did that tactically, now that we've got better line of sight, as Rob just said, to semiconductor comms chips for our AirSense 10, we can then remove the AirSense 10 card-to-cloud from the market and have just two products out there, the AirSense 10 fully cloud connected and the AirSense 11 fully cloud connected. We would look to have that sort of in play by mid this calendar year.
Great. I think we're out of time. Thanks very much.
Team. Thanks all. Thanks, team.
Thanks, everyone.