ResMed (ASX:RMD) share price on watch after smashing Q1 expectations

The ResMed Inc (ASX:RMD) share price will be on watch today after it smashed expectations in the first quarter of FY 2021…
The post ResMed (ASX:RMD) share price on watch after smashing Q1 expectations appeared first on Motley Fool Australia. –

Young woman in yellow striped top with laptop raises arm in victory

The ResMed Inc (ASX: RMD) share price could be a positive performer on Friday after it released a first quarter update which beat expectations.

How did ResMed perform in the first quarter?

During the first quarter of FY 2021, ResMed reported a 10% increase in revenue to US$751.9 million. This compares to the market consensus estimate of US$709.47 million.

And thanks to widening margins due to a favourable product mix changes and foreign exchange rates, ResMed’s operating profit grew even quicker at 27% to US$216.9 million. During the first quarter, ResMed’s product mix comprised 50% device revenue, 38% masks revenue, and 12% SaaS revenue.

On the bottom line, ResMed’s net income grew by 48% to US$178.4 million. Though, this was largely attributable to the impact of legal settlement expenses in the prior year.

On a non-GAAP basis, net income grew by 37% to US$185.4 million and earnings per share also grew 37% to US$1.27. The latter was ahead of expectations, with the market consensus at US$1.03 per share.

What were the drivers of its growth?

ResMed’s CEO, Mick Farrell, revealed that the company has been benefiting from increased demand for ventilators due to the pandemic.

He commented: “Our first quarter results reflect solid performance and positive trends across our business. During the quarter, we continued to support the global COVID-19 pandemic response, providing ventilators, masks, and circuits to countries in need around the world.”

But the company’s core sleep treatment business was also performing well, despite the challenges it faces from the COVID crisis.

Mr Farrell explained: “In our core markets of sleep apnea, COPD and asthma, we are encouraged by the sequential improvement in new patient volume, as well as the ongoing strong adoption of our mask and accessories resupply programs.”

“We have accelerated the launch of digital health solutions to help clinicians remotely diagnose, treat, and manage patients during the pandemic and beyond. Our global team is effectively managing SG&A expenses, while investing in broad-based R&D programs to help accelerate our ResMed 2025 growth strategy: improving 250 million lives in out-of-hospital healthcare in 2025,” he added.

How did ResMed perform in different regions?

ResMed’s revenue in the U.S., Canada, and Latin America, excluding Software as a Service, increased by 9% over the prior corresponding period. This was driven by strong sales across its mask product portfolio and increased demand for ventilators due to COVID-19. It was partially offset by a decrease in demand for sleep devices.

Revenue from Europe, Asia, and other markets grew by 10% on a constant currency basis. Management advised that this was primarily driven by sales across its device and mask product portfolio. This includes increased demand for ventilators due to COVID-19.

Finally, its Software as a Service revenue increased by 6% due to continued growth in resupply service offerings and stabilising patient flow in out-of-hospital care settings.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ResMed (ASX:RMD) share price on watch after smashing Q1 expectations appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!