The ResMed Inc. (ASX: RMD) share price is defying the market selloff and edging higher on Friday morning.
At the time of writing, the sleep disorder treatment company's shares are up slightly to $32.41.
This compares favourably to the ASX 200 index, which is down almost 1.5%, and follows the release of its fourth quarter update this morning.
ResMed share price edges higher on Q4 update
For the three months ended 30 June, ResMed reported a 9% increase in revenue to US$1.2 billion. This was driven by increased demand for sleep devices and masks, as well as strong growth across its Software as a Service business.
Revenue in the U.S., Canada, and Latin America grew by 10%, whereas revenue in Europe, Asia, and other markets grew by 8% on a constant currency basis. This was complemented by a 10% increase in Software as a Service revenue, reflecting continued organic growth in its SaaS portfolio.
ResMed reported a 350-basis point increase in its gross margin to 58.5% or 330 basis points on a non-GAAP basis to 59.1%. This was mainly due to reduced freight and manufacturing cost improvements, an increase in average selling prices, as well as favourable product mix.
This ultimately led to the company reporting quarterly earnings per share of US$1.98 or US$2.08 on a non-GAAP basis.
In light of this growth, the ResMed board elected to increase its quarterly dividend by 10% to US$0.53 per share. However, for the company's ASX listed CDIs, this represents a quarterly dividend of 5.3 US cents.
FY 2024 growth
For the full year, ResMed posted an 11% increase in revenue to US$4.7 billion with a gross margin of 56.7% (non-GAAP 57.7%).
On the bottom line, its earnings per share came in at US$6.92 or US$7.72 on a non-GAAP basis.
How does this compare to expectations?
With the ResMed share price outperforming today, it seems that the market was pleased with this result.
The consensus estimate was for earnings per share of US$2.09 and Macquarie was looking for a quarterly gross margin of 58.3%.
So, while its earnings are a fraction short of expectations, its margins came were stronger than expected.
Outlook
ResMed's CEO, Mick Farrell, spoke positively about the company's future and highlighted its huge addressable market. He said:
Nearly 2.5 billion suffer from major sleep health and breathing disorders. As the market leader in these significantly underpenetrated markets, we're well-positioned as the clear leader to drive increased market penetration, demand generation, and accelerate growth for our businesses.
We're laser-focused on increasing awareness with the fast-growth population of sleep-health-interested consumers, creating virtual pathways that expand access to therapies, while offering a broad portfolio of medical device products, software solutions, and beyond, as we deliver value for all ResMed stakeholders.
