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ResMed share price lifts on double-digit Q2 revenue growth

The ResMed Inc (ASX: RMD) share price rocketed more than 5% higher in early trade after the ASX healthcare company reported its second quarter FY20 results this morning. At the time of writing, Resmed shares are trading for $24.64 per share, up 1.36%.

What were the highlights from ResMed’s Q2 report?

ResMed reported strong overall revenue growth of 13% during the second quarter to 31 December to $736.2 million, compared to the prior period.  

Revenue growth was up 14% in constant currency terms. For the half year, revenue also grew strongly, up by 14%, while it grew 15% in constant currency terms. Net operating profit increased by 26% during the quarter.

The company also reported that gross margin for the quarter increased by 50 basis points to 58%. For the half year, gross margin also increased by 50 basis points to reach 57.8%.

Software-as-a-service revenue increased by 37%, compared to the prior year period, due to continued growth in the company’s Brightree service offerings and incremental contribution from the acquisition of MatrixCare, which closed in the second quarter of fiscal year 2019.

In the report, ResMed recapped its key announcements during the quarter. These included its collaboration agreement with Cerner Corporation (NASDAQ: CERN), which designated ResMed’s Brightree Home Health and Hospice platform as the company’s preferred solution to integrate with its electronic health record. ResMed also introduced AirFit N30, the world’s first tube-down nasal cradle CPAP mask with a front-facing tube, a brand new option for sleep apnea treatment.

Mick Farrell, ResMed’s CEO, commented “[w]e had a strong December quarter with double-digit top-line growth and further gross margin expansion, as well as continued fiscal discipline that resulted in improvements in operating leverage and double-digit growth at the bottom line.”

Farrell stated:

We are seeing continued strong customer demand for our new products, particularly in masks and accessories with another quarter of high-teens growth in that category. ResMed is continuing to lead in digital health as we transform lives in out-of-hospital healthcare, leading the innovation of medical devices and software that improve health outcomes, create efficiencies, and reduce overall healthcare system costs. With over 100 million lives improved in 2019, and strong growth ahead, we’re well on our way to improving 250 million lives in out-of-hospital healthcare in 2025.

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Motley Fool contributor Phil Harpur owns shares of ResMed Inc. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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