The ResMed Inc. (ASX: RMD) share price will be one to watch closely this morning.
This follows the release of the sleep treatment focused medical device company's third quarter results.
How did ResMed perform in the third quarter?
For the three months ended 31 March, ResMed posted revenue of US$768.8 million.
While this is down 0.1% from US$769.5 million in the prior corresponding period, it is worth noting that the prior corresponding period was boosted significantly by strong demand for ventilators at the height of the pandemic.
Positively, a reduction in selling, general, and administrative expenses offset this and underpinned a 3% increase in operating profit to US$223.4 million.
On the bottom line, earnings per share came in 1% higher than the prior corresponding period at US$1.30.
ResMed's CEO, Mick Farrell, said: "Our March 2021 quarter results reflect the ongoing recovery of core patient flow across our business, while we anniversary the $35 million of incremental COVID-19 revenue in the same quarter last year. Excluding the COVID19 revenue from the March 2020 quarter, we achieved positive revenue growth on both a headline and constant currency basis."
How did ResMed's businesses perform?
Revenue in the U.S., Canada, and Latin America region (excluding Software as a Service) grew by 2% during the quarter. This was driven by strong sales across mask products, partially offset by lower device sales, including decreased demand for ventilators.
Revenue in Europe, Asia, and other markets declined by 13% on a constant currency basis, primarily driven by lower device sales. This includes decreased demand for ventilators due to COVID-19, and flat sales in its mask product portfolio.
Software as a Service revenue increased by 5% due to continued growth in resupply service offerings and stabilising patient flow in out-of-hospital care settings.
ATO dispute
Mr Farrell also revealed that progress has been made with its long-running dispute with the Australian Tax Office.
He explained: "During the quarter we also made substantial progress toward resolving our long-running dispute with the Australian Tax Office. Although we do not have a final agreement, we have taken a reserve of US$255 million, reflecting our estimate of the net impact of a potential settlement. Our next steps are to agree on the final terms of a resolution giving us clarity for the future."
Outlook
No guidance was given for the remainder of the year. However, management appears confident in its growth trajectory.
"Going forward, we see accelerated awareness of the importance of respiratory health, growing adoption of digital health, and an increased focus on the importance of healthcare delivered at home. We are confident in accelerated growth in patient flow, and ongoing progress toward our goal of improving 250 million lives in out-of-hospital healthcare in 2025," concluded Mr Farrell.
The ResMed share price is up 17% over the last 12 months.
