Resmed shares slide as CFO retirement offsets positive Q3 results
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More news: Shares in Resmed tumbled in afternoon trade despite the sleep treatment company’s 11% year-on-year revenue growth, which was primarily driven by strong demand in the US, Canada and Latin America.
Shares had fallen 4.27% to $28.51 at 2:25pm AEST.
RBC Capital Markets analyst Craig Wong-Pan holds an outperform rating on the stock with a price target of $314.
While he noted the results beat RBC’s consensus across majority of key metrics, he added the retirement of outgoing CFO Brett Sandercock might be offsetting some of the market gains.
ResMed posts 11% revenue growth as sleep device demand surges, appoints new CFO
The news: ResMed reported 11% growth in third quarter revenue to USD1.4 billion ($1.9 billion), up from USD1.2 billion in the prior corresponding period, citing strong product demand and disciplined strategic execution.
The numbers: For the three months ended 31 March, the company reported a 9% increase in net income to USD398 million, up from USD365 million a year ago. Gross margin expanded by 290 basis points to 62.2% from 59.3% a year ago.
Income from operations reached USD499 million, representing a 17% year-on-year increase from USD426 million.
Research and development (R&D) expenses rose 12% to USD94.3 million, while diluted earnings per share (EPS) saw a 10% increase to USD2.75, compared to USD2.48 in the prior corresponding period.
The context: ResMed stated that the stronger third-quarter revenue was primarily driven by increased demand for its sleep devices, masks and accessories. Growth in the US, Canada and Latin America was a key contributor, with revenue in those regions increasing by 9%.
The company also stated the gross margin expansion was driven by cost improvement strategies, manufacturing and logistics efficiencies, and favourable foreign currency movements.
Separately, ResMed has appointed Aaron Bloomer as its new chief financial officer (CFO), effective 4 May, succeeding Brett Sandercock, who is retiring after 27 years with the company.
What they said: “These results highlight the momentum behind our strategy, and the continued progress we are making in shaping the future of sleep health, breathing health, and healthcare in the home,” CEO Mick Farrell said.
