It has been about a month since the last earnings report for ResMed Inc. RMD. Shares have lost about 3.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
ResMed Beats Q3 Earnings, Misses Sales Estimates
ResMed announced third-quarter fiscal 2017 adjusted earnings per share (EPS) of $0.71, up 2.8% from the prior-year quarter level. Earnings also beat the Zacks Consensus Estimate by $0.01.
Including one-time items, ResMed reported EPS of $0.62 in the quarter, down 3.1% year over year.
Revenues in Details
Revenues in the reported quarter increased 13.3% year over year (up 14% at constant exchange rate or CER) to $514.2 million. The figure however missed the Zacks Consensus Estimate of $519.6 million.
On a geographic basis, revenues in the Americas rose 18% year over year to $332.1 million, which included Brightree revenues of $35.0 million. Excluding Brightree, revenues in the Americas totaled $297.1 million, reflecting a 5% increase over the prior year quarter. Revenues in combined EMEA and APAC were $182.1 million, highlighting a 9% rise at CER, compared to the same period last year.
Adjusted gross margin expanded 103 basis points (bps) year over year to 58.3% in the reported quarter. Selling, general and administrative expenses were up 15.5% year over year to $137.8 million, while there was a 24.9% increase in Research and Development expenses to $35.1 million. This led to a 17.3% rise in adjusted operating expenses, which amounted to $172.9 million. Accordingly, adjusted operating margin in the quarter contracted 13 bps to 24.6%.
Financial Update
ResMed exited third-quarter 2017 with cash and cash equivalents of $827.3 million, compared with $788.1 million in the second quarter.
Year to date, the company generated $273.7 million of cash flow from operations, down from the year-ago figure of $404.9 million, displaying weak underlying earnings and a decline in net working capital balances.
Concurrent to its third-quarter earnings release, ResMed announced a quarterly dividend of $0.33 per share, representing a 10% increase from the company’s prior payout. The dividend will be paid on Jun 15, to shareholders of record as on May 11.
As previously declared, ResMed temporarily suspended its share repurchase program due to recent acquisitions. However, the company still expects to recommence the buy-back program sometime in fiscal 2018.