ResMed Inc. Earnings: Keeping the Profitability Streak Alive

Wall St. Cheat Sheet

ResMed Inc. reported net income above Wall Street’s expectations for the second quarter. ResMed is a developer, manufacturer and distributor of medical equipment for treating, diagnosing and managing sleep-disordered breathing and other respiratory disorders.

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ResMed Earnings Cheat Sheet for the Second Quarter

Results: Net income for ResMed Inc. rose to $62.9 million (42 cents per share) vs. $58.5 million (37 cents per share) in the same quarter a year earlier. This marks a rise of 7.6% from the year earlier quarter.

Revenue: Rose 8.7% to $332.7 million from the year earlier quarter.

Actual vs. Wall St. Expectations: RMD beat the mean analyst estimate of 38 cents per share. It fell short of the average revenue estimate of $339.6 million.

Quoting Management: Peter C. Farrell Ph.D, chairman and chief executive officer, commented, “On a regional basis, revenue in the Americas increased by 12% to $182.5 million over the prior year’s quarter. Revenue outside the Americas was $150.2 million, an increase of 5% over the prior year’s quarter, on both a GAAP and constant currency basis. Our global operating profit for the December quarter was $67.3 million and cash flow from operations was a record $110.6 million, demonstrating excellent operating performance. During the quarter, we also repurchased 4.1 million shares, at a cost of $110.5 million, as part of our ongoing capital management program.”

Key Stats:

Gross margin shrank 1.1 percentage points to 59.7%. The contraction appeared to be driven by increased costs, which rose 11.7% from the year earlier quarter while revenue rose 8.7%.

Revenue has risen the past four quarters. Revenue increased 11.6% to $314.8 million in the first quarter. The figure rose 17.3% in the fourth quarter of the last fiscal year from the year earlier and climbed 12.4% in the third quarter of the last fiscal year from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 33 cents versus a mean estimate of net income of 35 cents per share.

The increase in profit last quarter comes after net income fell in the previous quarter. In the first quarter, net income declined 10.9% to $50.5 million.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for third quarter has fallen from 40 cents per share to 39 cents. In the past month, the average estimate for the fiscal year has fallen from $1.55 per share to $1.54 abs.

Competitors to Watch: Allied Healthcare Product , Masimo Corporation , Electromed, Inc. , Medtronic, Inc. , Dynatronics Corporation , Thermo Fisher Scientific Inc. , Covidien plc , Dehaier Medical Systems Ltd , and CareFusion Corporation .

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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