ResMed Inc. (RMD) reported adjusted EPS of 39 cents in the fourth quarter of 2011, beating the Zacks Consensus Estimate of 36 cents and 14.7% higher from the year-ago quarter. The company also reported fiscal 2011 EPS of $1.44, which increased 17% year over year.
During the quarter, revenues increased 17% (up 11% at constant exchange rates or CER) year over year to $341.9 million. For fiscal 2011, ResMed reported a 14% growth (up13% at CER) in revenues to $1.2 billion.
Based on a favorable product mix and vastly under-penetrated and growing sleep-disorder breathing market, ResMed recorded over 14% growth in domestic market revenues to $182.8 million during the reported quarter. Further, revenues from the international market increased 22% (8% at CER) to $159 million, attributable to strong sales of S9 order set and newly launched Stellar 100 in Europe and parts of Asia and the FX series including the Quattro FX, Mirage FX and Swift FX.
Gross profit climbed 13.9% to $198.8 million, but gross margin contracted 164 basis points (bps) to 58.2% due to a 22.2% rise in cost of sales. Moreover, operating expenses witnessed a 24.8% increase to $132.2 million based on higher selling, general and administrative (SG&A) expenses (up 22.0%) and research and development (R&D) expenses (up 35.2%).
The increase in SG&A and R&D expenses was primarily due to the depreciation of domestic currency against the Australian dollar and euro. Higher expenses led to 400 bps drag in operating margin to 19.5%.
ResMed exited the quarter with cash and cash equivalents of $735.3 million compared with $488.8 million at the end of June 2010. Cash flow generated from operations was $74.3 million.
ResMed is one of the leading players in the market for generators, masks, and related accessories that are used for the treatment of obstructive sleep apnea and related respiratory disorders. The company is focused on medical equipment for the diagnosis and treatment of sleep-disordered breathing. Besides, the industry is benefiting from an aging population and an inclination for availing medical care away from hospitals.
Presently, Resmed is focusing on building strategic relationships in order to penetrate further in the international arena. This includes the recent 5-year exclusive distribution agreement with CareFusion (CFN) and acquisitions of Germany-based Grundler Medical GmbH and Irish high-tech company BiancaMed.
