ResMed (ASX:RMD) reported its June quarter and full year results after the U.S. market closed on Friday morning. The company met consensus expectations for both revenue and earnings.   

ResMed’s revenue rose nine per cent to US$1.2 billion ($1.85 billion) in the last quarter of fiscal 2024, taking quarterly dividends to US$0.53 per share, up 10 per cent. Operating profit was up 38 per cent, and non-GAAP operating profit was up 30 per cent. 

Operating cash flow was US$440 million, and debt repayments of US$300 million were made, while gross margin exceeded consensus by 110 basis points, growing by 330 basis points to 59.1 per cent. This improvement in gross margin was attributed to reduced component costs, which outweighed the challenges of geopolitical instability affecting freight costs.  

In their commentary, management anticipates freight will continue to pressure margins throughout FY25, however they forecast an improvement, guiding investors toward a gross margin range of 59-60 per cent for the full year. 

Revenue grew by 10 per cent in constant currency terms, largely driven by an increase in sales volume rather than price adjustments. The company’s device revenue rose six per cent year-over-year, aligning with the overall market’s mid-single-digit growth expectations, and management highlighted market share gains in some regions.  

Mask sales experienced a notable 15 per cent year-over-year growth, fueled by resupply programs and a strong reception for the newly released F40 mask, a competitor to Fisher & Paykel Healthcare’s (ASX:FPH) smallest and lightest mask, the Nova Micro. 

Mick Farrell, Chairman & CEO of ResMed noted, “Our fourth quarter and full-year fiscal year 2024 results demonstrate strong performance across all sectors of our business”, adding, “Ongoing patient and customer demand for our best-in-class products and software solutions is incredibly strong, driving solid growth across our devices, masks, and software businesses”. 

ResMed management also mentioned an internal study involving 800,000 de-identified patients using continuous positive airway pressure (CPAP) therapy who had prescriptions for weight loss GLP-1 medications. While it sounds a little like the manufacturer of black t-shirts saying black t-shirts cure cancer, the ResMed study indicated that patients with prescriptions for GLP-1 medications were 10.7 per cent more likely to begin CPAP therapy and 5.3 per cent more likely to reorder CPAP masks after two years. While these findings are promising, they lack statistical rigour.  

…more to come. 

The Montgomery Fund and the Montgomery [Private] Fund owns shares in ResMed. This article was prepared 2 August 2024 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade ResMed, you should seek financial advice.