This morning ResMed Inc. (CHESS) posted an operating cash flow of US$94 million on revenues of US$523.7 million for the quarter ending September 30 2017.
It will pay a quarterly dividend of US35 cents per share on adjusted earnings of US66 cents per share that came in roughly in line with analysts’ estimates.
San Diego-based ResMed reports its results in U.S. dollars as its primary listing is on the NYSE, while it offers ownership interests to Australian investors on the ASX that represent a 1/10th interest in the NYSE scrip. As the US scrip sells for US$78.60 the Australian scrip closed yesterday at A$10.15 on a USD/AUD FX-adjusted basis.
The company intends to recommence its share buyback later in the fiscal year to buy back at a minimum sufficient stock to neutralise the dilutory effect of its employee share payment scheme.
For the quarter revenue increased 11 per cent on a constant currency basis, while the key gross margins lifted to 58.4 per cent compared to 57.8 per cent in the prior year’s quarter. Adjusted net income came in at US$86.1 million, up 13 per cent on the prior year’s quarter.
On a trailing basis the group trades on 28x trailing adjusted earnings per share of US$2.82 with the U.S. scrip selling for US$78.61.
Analysts are forecasting another year of strong growth with the first quarter traditionally softer than the financial year end period. ResMed retains its bullet point revenue growth track record and profit is starting to track higher again after some margin headwinds in its core U.S. market.
For Australian investors then it remains a good long-term bet thanks to its position as a healthcare leader in a large global addressable market that has reasonable barriers to entry. The company also remains founder-led with a strong market position as it moves into the cloud-connected digital healthcare space.