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ResMed Inc. (RMD - Free Report) announced strong second-quarter fiscal 2021 results, wherein adjusted earnings per share (EPS) came in at $1.41, up 16.5% year over year. The metric also beat the Zacks Consensus Estimate by 15.6%.
The adjustments include certain non-recurring expenses/benefits like amortization of acquired intangibles and restructuring costs and expenses among others.
Improvement in demand for the company’s ventilators and ventilation mask systems and provision of digital health solutions and other tools to customers aiding remote care amid the pandemic boosted ResMed’s bottom line during the fiscal second quarter.
GAAP earnings per share of $1.23 improved 11.8% year over year.
Revenues
Fiscal second-quarter revenues, on a reported basis, increased 8.7% year over year (up 7% at constant exchange rate or CER) to $800 million. The figure beat the Zacks Consensus Estimate by 3.6%.
A Closer View of Q2 Top Line
Excluding Software-as-a-Service (SaaS), total Sleep and Respiratory Care, revenues in the United States, Canada and Latin America improved 4.6% from the prior-year period to $426.8 million. SaaS revenues grew 6% reportedly to $91.8 million.
Total Sleep and Respiratory Care revenues in combined Europe, Asia, and other markets grew 17% on a reported basis and 10% at CER to $281.4 million.
Global revenues from total Sleep and Respiratory Care in the quarter under review were $708.2 million, up 9% at reported basis and 7% at CER.
Overall increase in revenues was driven by robust performance of its mask and device product portfolios on increased demand for ventilators and ventilator masks.
Margins
Adjusted gross profit in the quarter under review rose 9% to $478.9 million despite an 8.1% uptick in cost of sales (excluding expenses related to amortization of acquired intangibles and restructuring).
Adjusted gross margin for the fiscal second quarter was 59.9%, reflecting a 20-basis point (bps) expansion from the year-ago number on benefits from favorable product mix and foreign exchange movements, partially offset by declines in average selling prices.
Selling, general and administrative expenses were down 1.1% year over year to $169.5 million (unchanged at CER). Research and development expenses increased 10% to $54.9 million.
Adjusted operating income was $254.5 million in the quarter under discussion, up 16.8% from the year-ago quarter. Adjusted operating margin expanded 222 bps year over year to 31.8%.
Financial Updates
ResMed exited the second quarter of fiscal 2021 with cash and cash equivalents of $255.9 million compared with $421.4 million at the end of the first quarter of fiscal 2021. Total debt (short and long-term) at the end of fiscal 2020 was $825.7million compared with $1.06 billion at the end of the first quarter of fiscal 2021.
Cash flow from operating activities at the end of the second quarter was $313.9 million compared with $232.3 million a year ago.
The company paid out $113.2 million as dividends during the fiscal second quarter.
Our Take
ResMed delivered solid second-quarter fiscal 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. It is encouraging to note that ResMed registered growth at CER across both its key operating segments — Total Sleep and Respiratory Care and SaaS. The reopening of sleep labs and physician practices across many geographies and robust adoption of digital health solutions look encouraging. Ventilators and mask sales were particularly strong on ramped up production and sales of the same amid the pandemic.
In the quarter, the company reported sequential improvement in new patient volume as well as the ongoing strong adoption of mask and accessories resupply programs. It has also accelerated the launch of digital health solutions to help clinicians remotely diagnose, treat, and manage patients during the pandemic and beyond. Expansion of both margins buoys optimism.
Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space include Meridian Bioscience, Inc. , Surface Oncology, Inc. , and OraSure Technologies, Inc. (OSUR - Free Report) .
The Zacks Consensus Estimate for Meridian Bioscience’s second-quarter 2021 adjusted EPS is currently pegged at 42 cents. The consensus estimate for second-quarter revenues stands at $92 million. The company, which currently carries a Zacks Rank #2 (Buy), is expected to release results soon. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Surface Oncology currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its second-quarter 2021 adjusted EPS is currently pegged at a cent. The consensus estimate for second-quarter revenues stands at $85 million.
The Zacks Consensus Estimate for OraSure's second-quarter fiscal 2021 adjusted EPS is currently pegged at 7 cents. The consensus estimate for revenues stands at $58.55 million. It currently has a Zacks Rank #2.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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ResMed (RMD) Q2 Earnings Surpass Estimates, Margins Rise
ResMed Inc. (RMD - Free Report) announced strong second-quarter fiscal 2021 results, wherein adjusted earnings per share (EPS) came in at $1.41, up 16.5% year over year. The metric also beat the Zacks Consensus Estimate by 15.6%.
The adjustments include certain non-recurring expenses/benefits like amortization of acquired intangibles and restructuring costs and expenses among others.
Improvement in demand for the company’s ventilators and ventilation mask systems and provision of digital health solutions and other tools to customers aiding remote care amid the pandemic boosted ResMed’s bottom line during the fiscal second quarter.
GAAP earnings per share of $1.23 improved 11.8% year over year.
Revenues
Fiscal second-quarter revenues, on a reported basis, increased 8.7% year over year (up 7% at constant exchange rate or CER) to $800 million. The figure beat the Zacks Consensus Estimate by 3.6%.
A Closer View of Q2 Top Line
Excluding Software-as-a-Service (SaaS), total Sleep and Respiratory Care, revenues in the United States, Canada and Latin America improved 4.6% from the prior-year period to $426.8 million. SaaS revenues grew 6% reportedly to $91.8 million.
ResMed Inc. Price, Consensus and EPS Surprise
ResMed Inc. price-consensus-eps-surprise-chart | ResMed Inc. Quote
Total Sleep and Respiratory Care revenues in combined Europe, Asia, and other markets grew 17% on a reported basis and 10% at CER to $281.4 million.
Global revenues from total Sleep and Respiratory Care in the quarter under review were $708.2 million, up 9% at reported basis and 7% at CER.
Overall increase in revenues was driven by robust performance of its mask and device product portfolios on increased demand for ventilators and ventilator masks.
Margins
Adjusted gross profit in the quarter under review rose 9% to $478.9 million despite an 8.1% uptick in cost of sales (excluding expenses related to amortization of acquired intangibles and restructuring).
Adjusted gross margin for the fiscal second quarter was 59.9%, reflecting a 20-basis point (bps) expansion from the year-ago number on benefits from favorable product mix and foreign exchange movements, partially offset by declines in average selling prices.
Selling, general and administrative expenses were down 1.1% year over year to $169.5 million (unchanged at CER). Research and development expenses increased 10% to $54.9 million.
Adjusted operating income was $254.5 million in the quarter under discussion, up 16.8% from the year-ago quarter. Adjusted operating margin expanded 222 bps year over year to 31.8%.
Financial Updates
ResMed exited the second quarter of fiscal 2021 with cash and cash equivalents of $255.9 million compared with $421.4 million at the end of the first quarter of fiscal 2021. Total debt (short and long-term) at the end of fiscal 2020 was $825.7million compared with $1.06 billion at the end of the first quarter of fiscal 2021.
Cash flow from operating activities at the end of the second quarter was $313.9 million compared with $232.3 million a year ago.
The company paid out $113.2 million as dividends during the fiscal second quarter.
Our Take
ResMed delivered solid second-quarter fiscal 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. It is encouraging to note that ResMed registered growth at CER across both its key operating segments — Total Sleep and Respiratory Care and SaaS. The reopening of sleep labs and physician practices across many geographies and robust adoption of digital health solutions look encouraging. Ventilators and mask sales were particularly strong on ramped up production and sales of the same amid the pandemic.
In the quarter, the company reported sequential improvement in new patient volume as well as the ongoing strong adoption of mask and accessories resupply programs. It has also accelerated the launch of digital health solutions to help clinicians remotely diagnose, treat, and manage patients during the pandemic and beyond. Expansion of both margins buoys optimism.
Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space include Meridian Bioscience, Inc. , Surface Oncology, Inc. , and OraSure Technologies, Inc. (OSUR - Free Report) .
The Zacks Consensus Estimate for Meridian Bioscience’s second-quarter 2021 adjusted EPS is currently pegged at 42 cents. The consensus estimate for second-quarter revenues stands at $92 million. The company, which currently carries a Zacks Rank #2 (Buy), is expected to release results soon. You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Surface Oncology currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its second-quarter 2021 adjusted EPS is currently pegged at a cent. The consensus estimate for second-quarter revenues stands at $85 million.
The Zacks Consensus Estimate for OraSure's second-quarter fiscal 2021 adjusted EPS is currently pegged at 7 cents. The consensus estimate for revenues stands at $58.55 million. It currently has a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>