The Resmed (ASX: RMD) share price has climbed 7% after the ASX healthcare share revealed its performance for the three months to March 2024.
Resmed is best known for its masks and devices that help people suffering with sleep apnea. It also has a growing software segment.
Resmed’s strong quarter
For the third quarter of FY24, the business saw revenue growth of 7% to US$1.2 billion.
The Resmed gross profit margin grew 260 basis points (2.60%) to 57.9%, while the underlying (non-GAAP) gross profit margin increased 240 basis points (2.40%) to 58.5%.
The company’s operating net profit (income from operations) increased 25% to $374.6 million, while underlying net profit rose 23% to $393.6 million. Statutory net profit rose 29% to $300.5 million.
Resmed’s operating cash flow was $402 million, with debt repayments of $220 million for the quarter.
The business also reported it made profit / earnings per share (EPS) of $2.04 and underlying EPS of $2.13. Profit is usually the most important thing when considering Resmed shares, or any profitable business.
During the quarter, it also paid $70 million in dividends and repurchased 261,000 shares for $50 million as part of its ongoing capital management.
Resmed also highlighted that with World Sleep Day, a global campaign was done to raise awareness of the importance of good sleep. A survey of 36,000 people across 17 markets showed half of respondents reported feeling excess daytime sleepiness and 40% reported getting no more than three nights of good sleep per week. More than one-third of respondents are now actively tracking their sleep patterns.
Management commentary
The Resmed CEO and Chair Mick Farrell said:
ResMed’s strong third-quarter fiscal year 2024 results reflect robust patient and customer demand for our products and software solutions, leading to double-digit mask and accessories revenue growth along with ongoing operational efficiencies to drive margin improvement and increased profitability, resulting in double-digit growth in both operating profit and earnings per share.
Over 2 billion people worldwide can benefit from a ResMed solution to help them sleep better, breathe better, and receive best in-class healthcare right where they live. We remain laser-focused on bringing market-leading innovation to customers, including our latest AirCurve11 range of non-invasive ventilators and our recently launched AirFit F40 mask system, combined with our entire portfolio of products, software, and solutions, allowing us to continue to deliver value for all our stakeholders.
Final thoughts on the Resmed share price
Resmed shares have made an incredible recovery over the past six months, rising by 36%.
It has done a good job of pushing away worries about weight loss drugs, it’s clear the company is continuing to display good earnings growth.
The question is – how much can earnings grow over the long-term? I’m not sure, it’s for me to predict long-term healthcare trends.
