ResMed shares on watch after smashing Q2 expectations

ResMed Inc (ASX: RMD) shares look set to have a positive session on Thursday.

That’s because Wall Street investors have responded very positively to the sleep treatment company’s quarterly update in after-hours trade.

What’s going on with ResMed shares?

US investors were scrambling to buy the company’s NYSE listed shares after it reported strong top and bottom line growth for the second quarter of FY 2024. Here’s a summary of how ResMed performed:

• Revenue increased 12% to US$1.2 billion (11% on a constant currency basis)
• Non-GAAP gross margin grew 10 bps to 56.9%
• Non-GAAP operating profit up 20%
• Non-GAAP diluted earnings per share of US$1.88
• Quarterly dividend of 48 US cents per share (4.8 US cents for ASX shareholders)

Management revealed that this strong result was driven by double-digit growth across its combined device, masks, and accessories, and residential care software businesses. In addition, cost discipline helped support an acceleration in profitability.

ResMed’s CEO, Mick Farrell, added:

The strong growth in patient flow we’ve seen over the past several quarters has supported ongoing device growth, as well as augmented and accelerated our replenishment programs for sustained mask and accessories growth. Organic growth of our residential care software business in home medical equipment, home health, home nursing, and beyond, catalyzed by strategic acquisitions, continues to deliver and complements our core mask and accessory business growth.

Pleasingly, Farrell is feeling very positive about the company’s outlook. He explains:

As we look ahead, ResMed is well-positioned to lean into leading the expansion and growth of sleep health and breathing health. We are the clear leader in a very large and growing market; I’m excited about ResMed’s future as we focus on delivering for our stakeholders through product innovation, operational excellence, and increasing brand awareness as we progress towards our goal of improving 250 million lives in 2025.

How does this compare to expectations?

The good news for ResMed shares today is that this result was comfortably ahead of the market’s expectations.

The company’s earnings per share of US$1.88 compares favourably with the consensus estimate of US$1.78 per share. In addition, its revenue of US$1.2 billion was approximately US$50 million ahead of estimates.

The post ResMed shares on watch after smashing Q2 expectations appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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