Key Points
- Year-over-year revenue increased by 7% to $1.2 billion, driven by growth in sleep devices and masks.
- Operating profit grew 25% with non-GAAP operating profit up 23%.
- Diluted earnings per share (EPS) were $2.04, a 29% increase from the prior year.
ResMed (RMD -0.30%), a medical device company specializing in sleep apnea and respiratory care, released its earnings for the third quarter of 2024 on April 25, 2024. The most significant news from the release was the company's impressive revenue growth of 7% year-over-year to $1.2 billion, outpacing analyst expectations. Diluted EPS came in at $2.04, above the consensus estimate of $1.60. Overall, it was a solid quarter demonstrating ResMed's strong performance and growth trajectory.
| Metric | Q3 2024 | Estimates | Q3 2023 | % Change YoY |
|---|---|---|---|---|
| Revenue | $1,197.0 million | $1,122.057 million | $1,116.9 million | 7% |
| Diluted EPS | $2.04 | $1.60 | $1.58 | 29% |
| Gross Margin | 57.9% | --- | 55.3% | 5% |
| Operating Income | $374.6 million | --- | $300.7 million | 25% |
| Source: Analyst estimates for the quarter provided by FactSet. |
Company Overview
ResMed Inc., a global leader in medical devices and cloud-connected software applications, focuses on treating sleep apnea, COPD (chronic obstructive pulmonary disease), and other respiratory conditions. The company's innovative products include CPAP (continuous positive airway pressure) and APAP (automatic positive airway pressure) machines such as the AirSense and AirMini series. ResMed operates in over 140 countries, constantly working on expanding its market reach and product innovation.
ResMed has recently emphasized market growth, particularly in high-growth regions like Asia, and substantial investments in digital health and cloud-connected platforms. The company's SaaS (Software as a Service) revenues now account for a notable portion of their income, driven by technological integration and acquisitions.
Quarter Highlights
This quarter, ResMed Inc. reinforced its strategic emphasis on market penetration, product innovation, and digital health expansion, showing robust financial performance and operational progress. The company's revenue grew by 7% year-over-year to $1.2 billion, driven by increased demand for sleep devices and masks.
ResMed’s gross margin expanded by 260 basis points to 57.9%, thanks to reduced freight and manufacturing costs. Additionally, non-GAAP gross margin grew by 240 basis points to 58.5%. Operating income saw a substantial increase of 25%, reaching $374.6 million, while non-GAAP operating income was up 23% to $393.6 million. This operating leverage highlights improved operational efficiencies and cost management.
The company's net income for the quarter stood at $300.5 million, a 29% increase from the previous year's $232.5 million. Corresponding diluted EPS climbed to $2.04 from $1.58, reflecting a strong bottom line performance. The non-GAAP net income reached $314.4 million, up 27% year-over-year, driving non-GAAP diluted EPS to $2.13.
Operational cash flow remained solid at $402 million, bolstering the company's cash position and allowing for $70 million in dividends and the repurchase of 261,000 shares for $50 million. This quarter also saw the launch of the AirCurve 11 series and the AirFit F40 mask in the U.S., enhancing ResMed’s product portfolio and market engagement.
Looking Ahead
Management’s outlook remains optimistic, focusing on sustained market growth, continuous product innovation, and expanded SaaS offerings. While specific guidance was not provided in the release, the strategic priorities include leveraging digital health integrations and expanding into underpenetrated markets like Asia.
Investors should watch for progress in ResMed's SaaS revenue growth, market penetration in emerging economies, and the impact of new product launches on the company's revenue mix. Continued focus on cost management and manufacturing efficiencies will also be crucial in maintaining healthy margins in the quarters ahead.
