Resmed (ASX: RMD) is a global leading developer, manufacturer and distributor of medical solutions to treat and manage sleep-disordered breathing (SDB) and other chronic respiratory conditions. The company is dual-listed on the ASX and NYSE.
The company is one of the few ASX-listed companies to successfully grow internationally, following in the footsteps of other successful Australian healthcare companies such as CSL (ASX: CSL) and Cochlear (ASX: COH). Resmed generates 56% of sales in the Americas, 34% in Europe, and only 10% in Asia-Pacific.
The company has an impressive financial history, It has achieved a five-year compound annual growth rate in net income from 2008-2013 of 24% to $307 million in FY13. Furthermore, the company is achieving return on equity of 20%. While revenue growth slowed to 5% for the first quarter of 2014 (compared to five-year average revenue growth of 13%), long-term growth prospects remain positive.
Resmed's target market is potentially very large. The National Heart Blood and Lung Institute estimate that 12 million Americans suffer from sleep apnea and Resmed states that approximately 4 million are currently diagnosed or treated for it every year. Rising global healthcare costs and obesity rates, and aging populations should further increase the demand for Resmed's products.
Resmed's strategy involves increasing awareness of the disorder among physicians and the general population. The company has stated that the SDB market will continue to grow due to a number of factors, including increased awareness of sleep apnea, improved understanding of the role of SDB treatment in the management of cardiac, neurologic and related disorders and an increase in home-based diagnosis.
Resmed is in a strong competitive position due to its superior sleep apnea devices and products and well-established reputation. Analysts believe that the company's margins should continue to improve due to supply chain efficiencies, a weaker Australian dollar and a greater proportion of products manufactured in Singapore.
Foolish takeaway
The recent fall in the share price of Resmed from $5.94 in October to $5.22 today presents an opportunity to purchase one of Australia's fastest growing healthcare companies at an attractive price. The current price earning ratio of 24 is not excessive for a company with the growth potential of Resmed.
