Shares up as ResMed tips revenues will grow
Medical devices group ResMed has flagged further strong growth with rising revenues and gains from the weaker Australian dollar to help offset any price cuts in the large US market.
June quarter revenue rose to $US414.6 million ($465.4 million) from $371.9 million a year earlier, which lifted the year to June revenue to a record $US1.51 billion.
The net profit for the June quarter fell to $US73 million from $US76.8 million following a $US24.76 million settlement paid to the University of Sydney with the funds used to establish two academic chairs in perpetuity. Earnings per share slipped to US51c from US54c.
If the settlement with the university is excluded, earnings a share rose a robust 17 per cent to a record US62c, in line with consensus forecasts by analysts.
A quarterly dividend of US25c per US-listed share has been declared, up from US17c, which is equal to US2.5c for the ASX-listed shares.
Additionally, during the quarter the company bought back 1.5 million shares on issue.
It said revenue rose 11 per cent in the Americas and 12 per cent in Europe, Asia and the Pacific in the quarter.
Investor optimism over the results saw the shares pushed to a new adjusted high of $5.55 on Friday, before surrendering part of those gains to close up 13¢ at $5.46.
The main focus of attention is the key US market, which accounts for half of group revenue. There, the government cut by 47 per cent from July 1 the reimbursement price paid for CPAP devices sold by sleep apnoea groups such as ResMed, which has triggered investor concern that private insurers will follow the government's lead.
"We've talked about a 3 per cent to 5 per cent price reduction in the market, and it's probably in the 4 per cent to 6 per cent range now," recently installed chief executive Michael Farrell told analysts.
"When you look at our cost structure, we're looking to take more than that [price decline] out to maintain our margins."
Globally, the outlook is for revenue growth of 6 to 8 per cent, he said, while in North America, the market was growing overall "and we are taking [market] share".
Additionally, products are now being sold into markets such as India and China, which will provide a new avenue of growth. "We're just placing our shoes [on] for the Asian growth marathon," Mr Farrell said.