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Why the ResMed share price stormed 14% higher in January

The ResMed Inc. (ASX: RMD) share price was a strong performer once again in January.

During the month the sleep treatment focused medical device company’s shares stormed over 14% higher. This stretched the company’s 12-month gain to a massive 91%.

Why did ResMed’s shares storm higher in January?

Investors were scrambling to buy ResMed’s shares last month in anticipation of a strong second quarter and half year update.

The company certainly did not disappoint, and on the final day of the month released a very impressive result.

For the three months ended December 31, ResMed reported revenue growth of 13% to US$736.2 million. This took its half year revenue to US1,417.2 million, which was up 14% over the prior corresponding period.

Things were even better further down the income statement thanks to its ever-improving margins. This was thanks primarily to the benefits from product mix changes and manufacturing and procurement efficiencies.

ResMed reported net operating profit growth of 26% to US$197.8 million for the second quarter. For the first half, net operating profit came in 22% higher than the same period last year at US$368.9 million.

Improving 250 million lives.

Also getting investors excited was management’s positive commentary.

The company’s CEO, Mick Farrell, said: “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,” he added.

ResMed wasn’t the only healthcare share racing higher last month. Also rising strongly were the shares of Paradigm Biopharmaceuticals Ltd (ASX: PAR) and Polynovo Ltd (ASX: PNV). They stormed 43% and 42% higher, respectively, over the period.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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