Specialist sleep treatment and healthcare business ResMed Inc. (CHESS) (ASX: RMD) this morning posted an operating profit of US$105.9 million on revenues of US$422 million for the quarter ending March 31, 2015.
During the quarter the company repurchased 300,000 shares as part of its capital management program.
The ASX-listed chess depositary instruments have fallen around 8% in value today as investors react to a flat profit result, despite the double-digit revenue growth.
Just a whiff of margin compression for a global healthcare business is enough to send institutional analysts into meltdown and today's heavy selling is a likely consequence of this. I expect the Wall Street analysts will be even less forgiving in their verdicts when the US-listed scrip opens for trade, although there are a number of positives to come out of the result.
The revenue growth is backed up by new product launches in the core US market and management's growth plan is based on a long-term strategy of staying ahead of the curve in product and market development.
Some of the bullish sentiment recently (the stock is up 51% in six months) has reportedly been attributed to progress the company is making in developing treatments for heart failure and other cardio-respiratory conditions.
Moreover, the company is cashed-up to fund further product development and already has a giant global market to grow its market-leading sleep treatment products into. The strengthening US dollar is another tailwind, although revenues in Europe and the Asia Pacific took a big hit on adverse currency movements this quarter.
For Australian investors looking for overseas exposure and leverage to the growing global spend on healthcare, it's hard to go past ResMed.
But there's another business that could be even better and probably on a better valuation right now…
