The ResMed Inc (ASX: RMD) share price could be a positive performer on Friday after it released a first quarter update which beat expectations.
How did ResMed perform in the first quarter?
During the first quarter of FY 2021, ResMed reported a 10% increase in revenue to US$751.9 million. This compares to the market consensus estimate of US$709.47 million.
And thanks to widening margins due to a favourable product mix changes and foreign exchange rates, ResMed's operating profit grew even quicker at 27% to US$216.9 million. During the first quarter, ResMed's product mix comprised 50% device revenue, 38% masks revenue, and 12% SaaS revenue.
On the bottom line, ResMed's net income grew by 48% to US$178.4 million. Though, this was largely attributable to the impact of legal settlement expenses in the prior year.
On a non-GAAP basis, net income grew by 37% to US$185.4 million and earnings per share also grew 37% to US$1.27. The latter was ahead of expectations, with the market consensus at US$1.03 per share.
What were the drivers of its growth?
ResMed's CEO, Mick Farrell, revealed that the company has been benefiting from increased demand for ventilators due to the pandemic.
He commented: "Our first quarter results reflect solid performance and positive trends across our business. During the quarter, we continued to support the global COVID-19 pandemic response, providing ventilators, masks, and circuits to countries in need around the world."
But the company's core sleep treatment business was also performing well, despite the challenges it faces from the COVID crisis.
Mr Farrell explained: "In our core markets of sleep apnea, COPD and asthma, we are encouraged by the sequential improvement in new patient volume, as well as the ongoing strong adoption of our mask and accessories resupply programs."
"We have accelerated the launch of digital health solutions to help clinicians remotely diagnose, treat, and manage patients during the pandemic and beyond. Our global team is effectively managing SG&A expenses, while investing in broad-based R&D programs to help accelerate our ResMed 2025 growth strategy: improving 250 million lives in out-of-hospital healthcare in 2025," he added.
How did ResMed perform in different regions?
ResMed's revenue in the U.S., Canada, and Latin America, excluding Software as a Service, increased by 9% over the prior corresponding period. This was driven by strong sales across its mask product portfolio and increased demand for ventilators due to COVID-19. It was partially offset by a decrease in demand for sleep devices.
Revenue from Europe, Asia, and other markets grew by 10% on a constant currency basis. Management advised that this was primarily driven by sales across its device and mask product portfolio. This includes increased demand for ventilators due to COVID-19.
Finally, its Software as a Service revenue increased by 6% due to continued growth in resupply service offerings and stabilising patient flow in out-of-hospital care settings.
