We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ResMed (RMD) Beats Earnings and Revenue Estimates in Q2
Read MoreHide Full Article
ResMed Inc. (RMD - Free Report) announced second-quarter fiscal 2017 adjusted earnings per share (EPS) of 73 cents, consistent with the prior-year quarter level. However, the quarter’s earnings surpassed the Zacks Consensus Estimate by 4.3%.
Including one-time items, ResMed reported EPS of 54 cents in the quarter, down 20.5% year over year.
Revenues in Details
Revenues in the reported quarter increased 16.6% year over year (up 18% at constant exchange rate or CER) to $530.4 million. The figure also surpassed the Zacks Consensus Estimate of $522 million.
On a geographic basis, revenues in the Americas rose 21% year over year to $326.8 million, primarily on the back of Software-as-a-Service revenues from Brightree and 13% growth in device sales. Excluding Brightree’s contribution, revenues in the Americas were up 9% to $293.0 million. On the other hand, sales in the combined EMEA and APAC region improved 13% at CER to $203.6 million.
Adjusted gross margin has expanded 17 basis points (bps) year over year to 58.3% in the reported quarter. Selling, general and administrative expenses were up 17.8% year over year to $139.3 million, while there was a 31.8% increase in Research and Development expenses to $38.1 million. This led to a 20.5% rise in adjusted operating expenses, which amounted to $177.4 million. Accordingly, adjusted operating margin in the quarter contracted 92 bps to 24.8%.
Financial Update
ResMed exited second-quarter 2017 with cash and cash equivalents of $788.1 million, compared with $731.4 million in the first quarter.
Year to date, the company generated $206.1 million of cash flow from operations, down 26.4% from the year-ago figure, displaying weak underlying earnings and a decline in net working capital balances.
Concurrent to its second-quarter earnings release, ResMed announced a quarterly dividend of 33 cents per share, representing a 10% increase from the company’s prior payout. The dividend will be paid on Mar 16, to shareholders of record as on Feb 9.
During the reported quarter, ResMed did not repurchase any shares, in sync with its decision of a temporary suspension of the buy-back program due to the company’s recent acquisition.
Guidance
The company has reiterated its gross margin guidance at the range of 58%–60% for the rest of fiscal 2017, considering the current exchange rates and trends in product and geographic mix.
Further, management expects SG&A expenses, as a percentage of revenues, to be in the band of 27%–28%. R&D expenses, as a percentage of revenues, are projected within 7%–8% for fiscal 2017. This reflects marketing expenses associated with product launches along with the ongoing legal expenses.
Our Take
We are impressed with ResMed’s fiscal second-quarter numbers, which have outpaced the Zacks Consensus Estimate in terms of both earnings and revenues. On a year-over-year basis, 18% of constant currency revenue growth was driven by its Brightree software offerings and strong device sales.
Among the various developments in the quarter, the company received FDA clearance for the world's smallest travel CPAP, formed a new venture – SleepScore Labs – to focus on consumer sleep wellness, attained the milestone of one billion nights of sleep data and successfully demonstrated that the use of myAir device significantly improves patient adherence to sleep therapy in Europe. The recently announced hike in dividend payment further boosts investors’ confidence in the stock.
However, challenges like competitive bidding and reimbursement issues continue to plague the stock. Additionally, foreign exchange movements dented second-quarter earnings by 3 cents per share, reflecting the unfavorable impact of the weaker Euro and stronger Australian dollar relative to the U.S. dollar.
Zacks Rank & Key Picks
ResMed carries a Zacks Rank #4 (Sell). Better-ranked medical stocks are Cardiovascular Systems, Inc. , Neogen Corporation (NEOG - Free Report) and OraSure Technologies, Inc. (OSUR - Free Report) . Cardiovascular Systems sports a Zacks Rank #1 (Strong Buy) while Neogen and OraSure carry a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Cardiovascular Systems rallied 174.7% in the past one year, way higher than the S&P 500’s 20.6%. It has a positive average earnings surprise of 31.8%.
Neogen gained 22.7% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth of 16.7% for the next five years compared to the industry average of 15.2%.
OraSure Technologies surged 51.2% in the last one year in comparison to the S&P 500. The company has a stellar four-quarter average earnings surprise of over 100%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
ResMed (RMD) Beats Earnings and Revenue Estimates in Q2
ResMed Inc. (RMD - Free Report) announced second-quarter fiscal 2017 adjusted earnings per share (EPS) of 73 cents, consistent with the prior-year quarter level. However, the quarter’s earnings surpassed the Zacks Consensus Estimate by 4.3%.
Including one-time items, ResMed reported EPS of 54 cents in the quarter, down 20.5% year over year.
Revenues in Details
Revenues in the reported quarter increased 16.6% year over year (up 18% at constant exchange rate or CER) to $530.4 million. The figure also surpassed the Zacks Consensus Estimate of $522 million.
ResMed Inc. Price, Consensus and EPS Surprise
ResMed Inc. Price, Consensus and EPS Surprise | ResMed Inc. Quote
On a geographic basis, revenues in the Americas rose 21% year over year to $326.8 million, primarily on the back of Software-as-a-Service revenues from Brightree and 13% growth in device sales. Excluding Brightree’s contribution, revenues in the Americas were up 9% to $293.0 million. On the other hand, sales in the combined EMEA and APAC region improved 13% at CER to $203.6 million.
Adjusted gross margin has expanded 17 basis points (bps) year over year to 58.3% in the reported quarter. Selling, general and administrative expenses were up 17.8% year over year to $139.3 million, while there was a 31.8% increase in Research and Development expenses to $38.1 million. This led to a 20.5% rise in adjusted operating expenses, which amounted to $177.4 million. Accordingly, adjusted operating margin in the quarter contracted 92 bps to 24.8%.
Financial Update
ResMed exited second-quarter 2017 with cash and cash equivalents of $788.1 million, compared with $731.4 million in the first quarter.
Year to date, the company generated $206.1 million of cash flow from operations, down 26.4% from the year-ago figure, displaying weak underlying earnings and a decline in net working capital balances.
Concurrent to its second-quarter earnings release, ResMed announced a quarterly dividend of 33 cents per share, representing a 10% increase from the company’s prior payout. The dividend will be paid on Mar 16, to shareholders of record as on Feb 9.
During the reported quarter, ResMed did not repurchase any shares, in sync with its decision of a temporary suspension of the buy-back program due to the company’s recent acquisition.
Guidance
The company has reiterated its gross margin guidance at the range of 58%–60% for the rest of fiscal 2017, considering the current exchange rates and trends in product and geographic mix.
Further, management expects SG&A expenses, as a percentage of revenues, to be in the band of 27%–28%. R&D expenses, as a percentage of revenues, are projected within 7%–8% for fiscal 2017. This reflects marketing expenses associated with product launches along with the ongoing legal expenses.
Our Take
We are impressed with ResMed’s fiscal second-quarter numbers, which have outpaced the Zacks Consensus Estimate in terms of both earnings and revenues. On a year-over-year basis, 18% of constant currency revenue growth was driven by its Brightree software offerings and strong device sales.
Among the various developments in the quarter, the company received FDA clearance for the world's smallest travel CPAP, formed a new venture – SleepScore Labs – to focus on consumer sleep wellness, attained the milestone of one billion nights of sleep data and successfully demonstrated that the use of myAir device significantly improves patient adherence to sleep therapy in Europe. The recently announced hike in dividend payment further boosts investors’ confidence in the stock.
However, challenges like competitive bidding and reimbursement issues continue to plague the stock. Additionally, foreign exchange movements dented second-quarter earnings by 3 cents per share, reflecting the unfavorable impact of the weaker Euro and stronger Australian dollar relative to the U.S. dollar.
Zacks Rank & Key Picks
ResMed carries a Zacks Rank #4 (Sell). Better-ranked medical stocks are Cardiovascular Systems, Inc. , Neogen Corporation (NEOG - Free Report) and OraSure Technologies, Inc. (OSUR - Free Report) . Cardiovascular Systems sports a Zacks Rank #1 (Strong Buy) while Neogen and OraSure carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardiovascular Systems rallied 174.7% in the past one year, way higher than the S&P 500’s 20.6%. It has a positive average earnings surprise of 31.8%.
Neogen gained 22.7% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth of 16.7% for the next five years compared to the industry average of 15.2%.
OraSure Technologies surged 51.2% in the last one year in comparison to the S&P 500. The company has a stellar four-quarter average earnings surprise of over 100%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>