ResMed Inc. RMD reported third-quarter fiscal 2015 adjusted earnings per share of 65 cents, exceeding the Zacks Consensus Estimate as well as the prior-year quarter's earnings by a penny. Reported earnings per share for the quarter came in at 64 cents, up 1.6% from the third quarter of fiscal 2014.
Revenues in Details
Revenues in the reported quarter increased 6% year over year (up 13% at constant exchange rate or CER) to $422.5 million. However, the top line failed to meet the Zacks Consensus Estimate of $424 million. According to ResMed, exchange rate movement, predominantly due to a weaker euro relative to the U.S. dollar, negatively impacted revenues in the reported quarter.
On a geographic basis, revenues in the Americas grossed $250.9 million, up 16% from the year-ago quarter number, while sales in the combined Europe and Asia-Pacific region declined 6% year over year (up 9% at constant exchange rate or CER) to $171.6 million.
The flow generator category globally recorded massive growth of 26% at CER while masks and other declined 1%. In Americas, flow generator sales were $133.1 million, up a robust 42% year over year driven by successful rollout of the company’s Astral, AirSense 10 and AirCurve 10 platforms. However, Masks and other sales were $117.8 million, down 4%, reflecting a comparatively stable pricing situation.
For revenues in combined Europe and Asia-Pacific, flow generator sales were $115.9 million, up 13% year over year at CER. Masks and other sales were $55.7 million, an increase of 3% at CER.
Operational Update
ResMed's gross margin was 59.5% in the reported quarter, reflecting a contraction of 379 basis points (bps) year over year, on account of declines in average selling prices, an unfavorable product and geographic mix, and an adverse foreign exchange impact.
Selling, general and administration expenses totaled $116.3 million, up 1.1% year over year (up 10% at CER), primarily driven by higher variable employee compensation, the impact of recent acquisitions and the release of contingent consideration in the prior-year quarter. Research and development expenses amounted to $27.0 million, down 8.4% year over year (up 4% at CER). The increase at CER reflects incremental investment in the areas of healthcare informatics and cardiology.
Accordingly, adjusted income from operations (excluding the impact of amortization expense) came in at $108.1 million, reflecting an upside of 0.9% from the prior-year quarter. However, the company recorded an operating margin of 25.6%, down 136 bps from third-quarter fiscal 2014.