ResMed Inc. Earnings: Margins Expand and Profit Climbs

ResMed Inc. (NYSE:RMD) reported net income above Wall Street’s expectations for the third quarter. ResMed is a developer, manufacturer and distributor of medical equipment for treating, diagnosing and managing sleep-disordered breathing and other respiratory disorders.

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ResMed Earnings Cheat Sheet for the Third Quarter

Results: Net income for ResMed Inc. rose to $64.6 million (44 cents per share) vs. $53.4 million (34 cents per share) in the same quarter a year earlier. This marks a rise of 21.1% from the year-earlier quarter.

Revenue: Rose 11.4% to $349.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: ResMed Inc. beat the mean analyst estimate of 41 cents per share. It beat the average revenue estimate of $338.5 million.

Quoting Management: Peter C. Farrell, Ph.D, chairman and chief executive officer, commented, “On a regional basis, revenue in the Americas increased by 18% to $189.9 million over the prior year quarter. Revenues outside the Americas were $159.2 million, an increase of 4% over the prior year’s quarter (a 7% increase on a constant currency basis). Our global operating profit for the March quarter was $76.5 million and cash flow from operations was a solid $86.0 million, demonstrating excellent operating performance. During the quarter, we also repurchased 2.3 million shares, at a cost of $67.0 million.”

Key Stats:

Revenue has increased for four consecutive quarters. Revenue increased 8.7% to $332.7 million in the second quarter. The figure rose 11.6% in the first quarter from the year earlier and climbed 17.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with net income of 42 cents versus a mean estimate of net income of 38 cents per share.

Margins rose in the second quarter after falling the quarter before. Gross margins grew to 60.3%, up two percentage points from the year-earlier quarter. In the first quarter, the figure rose 1.1 percentage points to 59.7% from the year earlier quarter.

Net income has increased 7.4% year-over-year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed 21.1% from the year-earlier quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to 43 cents per share from 42 cents. Over the past three months, the average estimate for the fiscal year has climbed from $1.54 per to share to $1.62.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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