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) Q1 Earnings Surpass Estimates, Margins Down
Read MoreHide Full Article
ResMed Inc.’s (RMD - Free Report) adjusted earnings per share (EPS) in the first quarter of fiscal 2024 were $1.64, up 8.6% year over year. The metric beat the Zacks Consensus Estimate by 0.6%.
The adjustments include certain non-recurring expenses/benefits like the amortization of acquired intangibles, restructuring and acquisition-related expenses, among others.
GAAP EPS in the reported quarter was $1.49, up 4.2% from the year-ago quarter’s EPS.
Revenues
On a reported basis, fiscal first-quarter revenues increased 16% year over year (up 15% at constant exchange rate or CER) to $1.10 billion. The figure beat the Zacks Consensus Estimate by 0.3%.
Moreover, year-over-year movements in foreign exchange positively impacted revenues by approximately $10 million in the fiscal first quarter.
Total Sleep and Respiratory Care revenues improved 14% (up 15% at CER) from the prior-year period to $963 million. Our model projected the segment’s global revenues to increase 11.4% in the fiscal first quarter.
Total Sleep and Respiratory Care revenues in Europe, Asia and other markets rose 21.9% on a reported basis (up 18% at CER) to $324.7 million.
In the United States, Canada and Latin America, total Sleep and Respiratory Care revenues were $638.4 million, up 10.4% year over year.
Global Revenues comprised Total Devices revenues of $564.7 million, up 9.1% (8% at CER), and Total Masks and other revenues of $398.3 million, up 21.8% (up 21% at CER), all on a year-over-year basis.
Per our model, Global Device revenues and Global Masks and other revenues were expected to grow 7.7% and 17.2%, respectively, in the fiscal first quarter.
Meanwhile, Software-as-a-Service (SaaS) revenues grew 31.5% to $139.3 million year over year. Our model projected the segment’s revenues to increase 26.3% in the fiscal first quarter.
Margins
The adjusted gross profit in the quarter under review rose 12.7% to $616.9 million despite a 20.4% uptick in the adjusted cost of sales (excluding the amortization of acquired intangibles and Astral field safety notification expenses).
However, the adjusted gross margin for the fiscal first quarter was 56%, reflecting a contraction of 162 basis points (bps). This decrease can be mainly attributed to component cost increases, partially offset by a favorable product mix due to the increase in mask growth relative to device growth and favorable foreign currency movements.
SG&A expenses rose 14.9% year over year to $240.7 million. R&D expenses increased 19.8% to $75.7 million.
The adjusted operating income was $318.3 million in the quarter under discussion, up 9.7% from the year-ago quarter. However, the adjusted operating margin contracted 165 bps year over year to 28.9%.
Financial Updates
ResMed exited the first quarter of fiscal 2024 with cash and cash equivalents of $209.1 million compared with $227.9 million as of Jun 30, 2023. Total debt (short and long-term) at the end of the fiscal first quarter was $1.36 billion compared with $1.44 billion at the end of fiscal 2023.
The cumulative net cash provided by operating activities at the end of the fiscal first quarter was $286.3 million compared with $44.7 million in the year-ago period.
The company paid out $70.6 million in dividends in the fiscal first quarter.
Our Take
ResMed exited the first quarter of fiscal 2024 with both earnings and revenues beating estimates. Revenue growth was driven by ongoing patient flow and solid demand across the global sleep and respiratory care markets, along with the increasing adoption of the company’s outside hospital software solution.
With the best-in-class AirSense 11 platform, ResMed is well-positioned to continue to grow across global markets, having demonstrated strong growth this quarter in Europe, Asia and beyond. Solid, sustained growth in the SaaS business raises our optimism, driven by contributions from the MEDIFOX DAN business in Germany and organic growth across the Brightree and MatrixCare brands in the U.S. market.
Meanwhile, a contraction in both margins raises our concern. Higher SG&A expenses reflected increases in employee-related costs and the incremental SG&A expense associated with the MEDIFOX DAN acquisition.
Inari Medical, carrying a Zacks Rank #2 (Buy), reported a second-quarter 2023 adjusted EPS of 4 cents, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inari Medical has an estimated earnings growth rate of 725% for the next year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Insulet, carrying a Zacks Rank #2, reported a second-quarter 2023 adjusted EPS of 38 cents, which beat the Zacks Consensus Estimate by 58.3%. Revenues of $396.5 million outpaced the consensus estimate by 3.3%.
Insulet has an estimated long-term earnings growth rate of 41.5% compared with the industry’s 14.4% growth. PODD’s earnings surpassed estimates in all the trailing four quarters, the average being 126.9%.
Cencora reported third-quarter fiscal 2023 adjusted earnings of $2.92, which beat the Zacks Consensus Estimate by 3.2%. Revenues of $66.9 billion surpassed the Zacks Consensus Estimate by 5.6%. It currently has a Zacks Rank #2.
Cencora has an earnings yield of 6.8% compared with the industry’s -1.1%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.5%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
ResMed (RMD) Q1 Earnings Surpass Estimates, Margins Down
ResMed Inc.’s (RMD - Free Report) adjusted earnings per share (EPS) in the first quarter of fiscal 2024 were $1.64, up 8.6% year over year. The metric beat the Zacks Consensus Estimate by 0.6%.
The adjustments include certain non-recurring expenses/benefits like the amortization of acquired intangibles, restructuring and acquisition-related expenses, among others.
GAAP EPS in the reported quarter was $1.49, up 4.2% from the year-ago quarter’s EPS.
Revenues
On a reported basis, fiscal first-quarter revenues increased 16% year over year (up 15% at constant exchange rate or CER) to $1.10 billion. The figure beat the Zacks Consensus Estimate by 0.3%.
Moreover, year-over-year movements in foreign exchange positively impacted revenues by approximately $10 million in the fiscal first quarter.
ResMed Inc. Price, Consensus and EPS Surprise
ResMed Inc. price-consensus-eps-surprise-chart | ResMed Inc. Quote
A Closer View of the Q1 Top Line
Total Sleep and Respiratory Care revenues improved 14% (up 15% at CER) from the prior-year period to $963 million. Our model projected the segment’s global revenues to increase 11.4% in the fiscal first quarter.
Total Sleep and Respiratory Care revenues in Europe, Asia and other markets rose 21.9% on a reported basis (up 18% at CER) to $324.7 million.
In the United States, Canada and Latin America, total Sleep and Respiratory Care revenues were $638.4 million, up 10.4% year over year.
Global Revenues comprised Total Devices revenues of $564.7 million, up 9.1% (8% at CER), and Total Masks and other revenues of $398.3 million, up 21.8% (up 21% at CER), all on a year-over-year basis.
Per our model, Global Device revenues and Global Masks and other revenues were expected to grow 7.7% and 17.2%, respectively, in the fiscal first quarter.
Meanwhile, Software-as-a-Service (SaaS) revenues grew 31.5% to $139.3 million year over year. Our model projected the segment’s revenues to increase 26.3% in the fiscal first quarter.
Margins
The adjusted gross profit in the quarter under review rose 12.7% to $616.9 million despite a 20.4% uptick in the adjusted cost of sales (excluding the amortization of acquired intangibles and Astral field safety notification expenses).
However, the adjusted gross margin for the fiscal first quarter was 56%, reflecting a contraction of 162 basis points (bps). This decrease can be mainly attributed to component cost increases, partially offset by a favorable product mix due to the increase in mask growth relative to device growth and favorable foreign currency movements.
SG&A expenses rose 14.9% year over year to $240.7 million. R&D expenses increased 19.8% to $75.7 million.
The adjusted operating income was $318.3 million in the quarter under discussion, up 9.7% from the year-ago quarter. However, the adjusted operating margin contracted 165 bps year over year to 28.9%.
Financial Updates
ResMed exited the first quarter of fiscal 2024 with cash and cash equivalents of $209.1 million compared with $227.9 million as of Jun 30, 2023. Total debt (short and long-term) at the end of the fiscal first quarter was $1.36 billion compared with $1.44 billion at the end of fiscal 2023.
The cumulative net cash provided by operating activities at the end of the fiscal first quarter was $286.3 million compared with $44.7 million in the year-ago period.
The company paid out $70.6 million in dividends in the fiscal first quarter.
Our Take
ResMed exited the first quarter of fiscal 2024 with both earnings and revenues beating estimates. Revenue growth was driven by ongoing patient flow and solid demand across the global sleep and respiratory care markets, along with the increasing adoption of the company’s outside hospital software solution.
With the best-in-class AirSense 11 platform, ResMed is well-positioned to continue to grow across global markets, having demonstrated strong growth this quarter in Europe, Asia and beyond. Solid, sustained growth in the SaaS business raises our optimism, driven by contributions from the MEDIFOX DAN business in Germany and organic growth across the Brightree and MatrixCare brands in the U.S. market.
Meanwhile, a contraction in both margins raises our concern. Higher SG&A expenses reflected increases in employee-related costs and the incremental SG&A expense associated with the MEDIFOX DAN acquisition.
Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Inari Medical (NARI - Free Report) , Insulet (PODD - Free Report) and Cencora, Inc. (COR - Free Report) .
Inari Medical, carrying a Zacks Rank #2 (Buy), reported a second-quarter 2023 adjusted EPS of 4 cents, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inari Medical has an estimated earnings growth rate of 725% for the next year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Insulet, carrying a Zacks Rank #2, reported a second-quarter 2023 adjusted EPS of 38 cents, which beat the Zacks Consensus Estimate by 58.3%. Revenues of $396.5 million outpaced the consensus estimate by 3.3%.
Insulet has an estimated long-term earnings growth rate of 41.5% compared with the industry’s 14.4% growth. PODD’s earnings surpassed estimates in all the trailing four quarters, the average being 126.9%.
Cencora reported third-quarter fiscal 2023 adjusted earnings of $2.92, which beat the Zacks Consensus Estimate by 3.2%. Revenues of $66.9 billion surpassed the Zacks Consensus Estimate by 5.6%. It currently has a Zacks Rank #2.
Cencora has an earnings yield of 6.8% compared with the industry’s -1.1%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.5%.