Shares up as ResMed tips strong growth in revenue
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 US51¢ from US54¢.
If the settlement with the university is excluded, earnings a share rose a robust 17 per cent to a record US62¢, in line with consensus forecasts by analysts.
A quarterly dividend of US25¢ per US-listed share has been declared, up from US17¢, which is equal to US2.5¢ 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.
Frequently Asked Questions about this Article…
ResMed reported June-quarter revenue of US$414.6 million (about A$465.4m), up from US$371.9 million a year earlier, lifting the year-to-June revenue to a record US$1.51 billion.
Net profit for the June quarter fell to US$73 million from US$76.8 million mainly because ResMed paid a US$24.76 million settlement to the University of Sydney to fund two academic chairs in perpetuity.
Reported EPS slipped to US51¢ from US54¢. Excluding the US$24.76 million settlement, EPS rose a robust 17% to a record US62¢, which matched analysts' consensus forecasts.
Yes. ResMed declared a quarterly dividend of US25¢ per US-listed share, up from US17¢ previously. That dividend equates to US2.5¢ for ASX-listed shares.
Yes. During the quarter ResMed bought back 1.5 million shares on issue as part of its capital management activity.
The US accounts for about half of ResMed's group revenue. A government reimbursement cut of 47% for CPAP devices from July 1 has raised concerns about price pressure. CEO Michael Farrell said the market may see a roughly 4–6% price reduction and that ResMed is targeting cost reductions larger than that to protect margins.
Management expects global revenue growth of 6–8%. Recent quarterly revenue rose 11% in the Americas and 12% in Europe, Asia and the Pacific. ResMed is also expanding into markets such as India and China, which the company cites as new avenues for growth.
Investor optimism pushed ResMed shares to a new adjusted high of $5.55 before they settled back to close up 13¢ at $5.46 after the results were released.
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