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ResMed (RMD) to Report Q1 Earnings: What's in the Cards?

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ResMed Inc. (RMD - Free Report) is set to report first-quarter fiscal 2022 results on Oct 28, after market close.

In the last reported quarter, the company’s earnings of $1.35 beat the Zacks Consensus Estimate by 8%. The company’s earnings surpassed estimates in the trailing four quarters, the average beat being 14.93%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

ResMed ended fiscal 2021 with healthy and consistent sales despite pandemic-led disruption. New product launches and strong uptake for its products continue to drive market share gains for the company, which is expected to reflect in Q1 fiscal 2022 results.

The Total Sleep and Respiratory Care segment is likely to have witnessed positive sales growth in the fiscal first quarter.

In the last reported quarter, ResMed’s sleep and respiratory care devices experienced a significant surge in demand due to a recent product recall by one of its leading competitors. The industry’s supply chain has been put under additional strain due to this demand. According to management, ResMed might not be able to meet the full supply gap (implying the entire production of ResMed in this line will be fully consumed) in the coming months. This spike in demand is likely to have continued through the first fiscal quarter, benefiting the company’s Total Sleep and Respiratory Care business. Further, a steady rebound in sleep patient flow with gradual opening up of the economy is also likely to have driven growth in the first quarter.

ResMed Inc. Price and EPS Surprise

ResMed Inc. Price and EPS Surprise

ResMed Inc. price-eps-surprise | ResMed Inc. Quote

The AirSense 10 is expected to have experienced constant customer uptake as it did in the previous quarter. The launch of the next-generation positive airway pressure (PAP) device, AirSense 11, in mid-August is also likely to have contributed to growth in the to-be reported quarter. This PAP device is intended to enable patients to begin and maintain treatment for obstructive sleep apnea.

The Software-as-a-Service (SaaS) segment, too, is well-positioned for positive sales growth in the fiscal first quarter. We expect this arm to deliver better results in the to-be-reported quarter on the back of continued strength in its cloud-based platform called Air Solution. In its earnings call for the fiscal fourth quarter, the company noted that Air Solutions contains more than 9 billion nights of respiratory medical data.

The rapid uptake of the AirView for ventilation software solution is likely to have contributed to growth in the first quarter. ResMed's newly-upgraded patient engagement platform, MyAir, is also expected to generate growth. The latest release of myAir 2.0 release is compatible with the newly-launched AirSense 11 and can be considered a potential growth driver.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter fiscal 2022 revenues is pegged at $859.8 million, suggesting a 14.3% rise over the year-ago reported figure.

The Zacks Consensus Estimate for the company’s first-quarter fiscal 2022 earnings per share is pegged at $1.35, indicating a rise of 6.3% from the year-ago quarter’s reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: ResMed has an Earnings ESP of -7.41%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +0.31% and a Zacks Rank of 2. The company will release third-quarter 2021 results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quest Diagnostics Incorporated (DGX - Free Report) has an Earnings ESP of +7.35% and a Zacks Rank of 2. The company is scheduled to release third-quarter 2021 results on Oct 21.

Insulet Corporation (PODD - Free Report) has an Earnings ESP of +37.17% and a Zacks Rank of 2. The company will announce third-quarter 2021 results on Nov 4.