The ResMed Inc (ASX: RMD) share price will be one to watch on Friday morning.
This follows the release of sleep treatment focused medical device company's full year results.
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ResMed share price on watch amid solid FY 2022 growth
- Revenue up 12% year over year to US$3.6 billion
- Gross margin contracted 140 basis points to 57.7%
- Operating income up 11% to US$1 billion
- Non-GAAP net income up 9% to US$850.8 million
What happened in FY 2022?
For the 12 months ended 30 June, ResMed reported a 12% (13% in constant currency) increase in revenue to US$3.6 billion. This followed a 4% (8% in constant currency) increase in revenue during the fourth quarter to US$914.7 million.
A key driver of its strong full year growth was the U.S., Canada, and Latin America segment. It reported a 15% increase in revenue to US$2,382.6 million thanks to a 24% increase in device revenue and a 7% lift in software-as-a-service revenues.
Combined Europe, Asia, and other markets supported this with a 7% (11% in constant currency) increase in sales to US$1,195.5 million. This growth was split evenly between its devices and masks businesses.
In addition, the company's revenue was boosted by a competitor recall. Management estimates that incremental fourth quarter revenue in the range of US$60 million to US$70 million related to the recall. This implies an annual total of US$220 million to US260 million.
And while its margins were impacted by higher freight and manufacturing costs, this couldn't stop ResMed from delivering solid non-GAAP net income growth of 9% to US$850.8 million.
This allowed the ResMed board to declare a final quarterly cash dividend of 44 US cents per share (4.4 US cents for its ASX listed CDIs) which is up 5% on the prior corresponding period.
How does this compare to expectations?
Potentially good news for the ResMed share price is that this result appears to have come in ahead of expectations.
For example, the market consensus estimate was for a full year profit after tax of US$825.6 million.
However, it is worth noting that the ResMed share price is trading flat in after hours trade on Wall Street after falling 1% overnight. This could be a sign that today will be a red day despite the earnings beat.
Management commentary
ResMed's CEO, Mick Farrell, was very pleased with the company's performance in FY 2022. He said:
Our fourth quarter and full-year fiscal year 2022 results demonstrate strong growth and ResMed's market leadership. During the quarter, we saw continued adoption of our most advanced platform innovation to date, the 100% cloud-connectable AirSense 11. We launched this solution into several new countries in Europe while continuing to see strong sales in the U.S.
We also introduced our newest device to meet the needs of an industry crisis in PAP supply, the AirSense 10 Card-to-Cloud solution, during the quarter. The card-to-cloud device was launched into the U.S. and many other markets and is designed to work without an embedded communications module. This redesign allowed us to increase deliveries to customers and ultimately to get many more patients onto life-saving sleep apnea and respiratory care therapy. Both of these platforms, as well as our legacy, market-leading, 100% cloud-connected AirSense 10 device, will support solid growth throughout FY23.
Outlook
No guidance has been given for FY 2023. However, Farrell spoke positively about the company's growth prospects and its medium term goal. He concluded:
Our global team remains focused on supporting patients, providers, and physicians — our top priority is to get products directly into the hands of patients who need therapy most. Looking ahead, we are confident in our ability to grow steadily throughout fiscal year 2023 and to continue delivering for all stakeholders. We are investing in R&D to drive accelerated adoption of digital health solutions in sleep apnea, COPD, and outside-hospital care, as we progress towards our goal to improve 250 million lives in 2025.
