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ResMed (RMD) Q1 Earnings In Line, Operating Margin Falls
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ResMed Inc.'s (RMD - Free Report) adjusted earnings per share (EPS) in the first quarter of fiscal 2023 were $1.51, unchanged year over year. The metric also came in line with the Zacks Consensus Estimate.
The adjustments include certain non-recurring expenses/benefits like amortization of acquired intangibles and acquisition-related expenses, among others.
GAAP EPS in the reported quarter was $1.43, up 2.9% from the year-ago quarter’s EPS.
Revenues
Fiscal first-quarter revenues on a reported basis increased 5.1% year over year (up 9% at the constant exchange rate or CER) to $950.3 million. The figure beat the Zacks Consensus Estimate by 0.8%.
A Closer View of the Q1 Top Line
Total Sleep and Respiratory Care revenues in the United States, Canada and Latin America improved 18% from the prior-year period to $578.1 million.
Total Sleep and Respiratory Care revenues in Europe, Asia and other markets fell 16% on a reported basis and fell 6% at CER to $266.3 million.
Global revenues from total Sleep and Respiratory Care in the quarter under review were $844.4 million, up 5% on a reported basis and up 9% at CER.
Meanwhile, Software as a Service (SaaS) revenues grew 9% to $105.9 million.
The revenue growth in the quarter was backed byincreased demand for the company’s sleep products across its portfolio and ongoing device demand generated by ResMed’s competitors' product recall. Year-on-year movements in foreign exchange, in particular, a weaker euro, negatively impacted revenues by approximately $36 million in the reported quarter.
Margins
Adjusted gross profit in the quarter under review rose 5.8% to $547.2 million despite a 4.3% uptick in the cost of sales (excluding expenses related to amortization of acquired intangibles and restructuring). Adjusted gross margin for the fiscal first quarter was 57.6%, reflecting a 35-basis point (bps) expansion.
The increase is attributable to increases in average selling prices, partially offset by unfavorable product mix and foreign exchange headwinds.
Selling, general and administrative expenses rose 9.7% year over year to $193.9 million (up 16% at CER). Research and development expenses increased 5.4% to $63.2 million (up 9% at CER).
Adjusted operating income was $290.1 million in the quarter under discussion, up 3.3% from the year-ago quarter. Adjusted operating margin however contracted 52 bps year over year to 30.5%.
Financial Updates
ResMed exited the first quarter of fiscal 2023 with cash and cash equivalents of $207.2 million compared with $201.8 million at the end of the fourth quarter of fiscal 2022. Total debt (short and long-term) at the end of the fiscal fourth quarter was 795.3 million compared with $$775.2 million at the end of the fiscal fourth quarter.
Cumulative net cash provided by operating activities at the end of the fiscal first quarter was $44.7 million, compared with a cumulative net cash outflow of $65.7million in the year-ago quarter.
The company paid out $64.4 million as dividendsduring the fiscal first quarter.
Our Take
ResMed exited the first quarter of fiscal 2023 with better-than-expected revenues and in-line earnings. The company recorded a robust sales performance in the quarter on increased demand for sleep and respiratory care devices. The company registered strong customer uptake of the re-engineered AirSense 10 Card-to-Cloud device. The company continues to increase its access to semiconductor communications chips. However, the FX headwind negatively impacted revenues by approximately $36 million in the reported quarter.
The contraction of the operating margin as a result of escalating expenses is discouraging. The persistent supply chain constraints in a challenging freight environment are hampering ResMed’s ability to meet the growing device demand.
Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Centene Corporation (CNC - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 29.7% for full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Centene, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of $1.30, which beat the Zacks Consensus Estimate by 6.6%. Revenues of $35.87 billion outpaced the consensus mark by 1.1%.
Centene has an estimated long-term growth rate of 14.2%. CNC’s earnings surpassed estimates in the trailing four quarters, the average being 5.2%.
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ResMed (RMD) Q1 Earnings In Line, Operating Margin Falls
ResMed Inc.'s (RMD - Free Report) adjusted earnings per share (EPS) in the first quarter of fiscal 2023 were $1.51, unchanged year over year. The metric also came in line with the Zacks Consensus Estimate.
The adjustments include certain non-recurring expenses/benefits like amortization of acquired intangibles and acquisition-related expenses, among others.
GAAP EPS in the reported quarter was $1.43, up 2.9% from the year-ago quarter’s EPS.
Revenues
Fiscal first-quarter revenues on a reported basis increased 5.1% year over year (up 9% at the constant exchange rate or CER) to $950.3 million. The figure beat the Zacks Consensus Estimate by 0.8%.
A Closer View of the Q1 Top Line
Total Sleep and Respiratory Care revenues in the United States, Canada and Latin America improved 18% from the prior-year period to $578.1 million.
Total Sleep and Respiratory Care revenues in Europe, Asia and other markets fell 16% on a reported basis and fell 6% at CER to $266.3 million.
Global revenues from total Sleep and Respiratory Care in the quarter under review were $844.4 million, up 5% on a reported basis and up 9% at CER.
Meanwhile, Software as a Service (SaaS) revenues grew 9% to $105.9 million.
ResMed Inc. PE Ratio (TTM)
ResMed Inc. pe-ratio-ttm | ResMed Inc. Quote
The revenue growth in the quarter was backed byincreased demand for the company’s sleep products across its portfolio and ongoing device demand generated by ResMed’s competitors' product recall. Year-on-year movements in foreign exchange, in particular, a weaker euro, negatively impacted revenues by approximately $36 million in the reported quarter.
Margins
Adjusted gross profit in the quarter under review rose 5.8% to $547.2 million despite a 4.3% uptick in the cost of sales (excluding expenses related to amortization of acquired intangibles and restructuring). Adjusted gross margin for the fiscal first quarter was 57.6%, reflecting a 35-basis point (bps) expansion.
The increase is attributable to increases in average selling prices, partially offset by unfavorable product mix and foreign exchange headwinds.
Selling, general and administrative expenses rose 9.7% year over year to $193.9 million (up 16% at CER). Research and development expenses increased 5.4% to $63.2 million (up 9% at CER).
Adjusted operating income was $290.1 million in the quarter under discussion, up 3.3% from the year-ago quarter. Adjusted operating margin however contracted 52 bps year over year to 30.5%.
Financial Updates
ResMed exited the first quarter of fiscal 2023 with cash and cash equivalents of $207.2 million compared with $201.8 million at the end of the fourth quarter of fiscal 2022. Total debt (short and long-term) at the end of the fiscal fourth quarter was 795.3 million compared with $$775.2 million at the end of the fiscal fourth quarter.
Cumulative net cash provided by operating activities at the end of the fiscal first quarter was $44.7 million, compared with a cumulative net cash outflow of $65.7million in the year-ago quarter.
The company paid out $64.4 million as dividendsduring the fiscal first quarter.
Our Take
ResMed exited the first quarter of fiscal 2023 with better-than-expected revenues and in-line earnings. The company recorded a robust sales performance in the quarter on increased demand for sleep and respiratory care devices. The company registered strong customer uptake of the re-engineered AirSense 10 Card-to-Cloud device. The company continues to increase its access to semiconductor communications chips. However, the FX headwind negatively impacted revenues by approximately $36 million in the reported quarter.
The contraction of the operating margin as a result of escalating expenses is discouraging. The persistent supply chain constraints in a challenging freight environment are hampering ResMed’s ability to meet the growing device demand.
Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Centene Corporation (CNC - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 29.7% for full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Centene, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of $1.30, which beat the Zacks Consensus Estimate by 6.6%. Revenues of $35.87 billion outpaced the consensus mark by 1.1%.
Centene has an estimated long-term growth rate of 14.2%. CNC’s earnings surpassed estimates in the trailing four quarters, the average being 5.2%.