Resmed reports 12% jump in profit

Could this be a stock to watch?

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 3, 2012 3:23 pm AEST

Sleep disorder equipment supplier Resmed Inc (ASX: RMD) has today announced record revenues and income for the June quarter 2012. Profit for the quarter was US$76.8 million, an increase of 31% over the previous corresponding period, while revenues climbed 9% to $371.9 million.

For the year ended June 2012, the company has reported a 10% increase in revenues to US$1.4 billion, with net income rising 12% to US$254.9 million, compared to the previous year.

The majority of the record revenue comes from a 13% jump in sales in the US, while revenues from the rest of its operations increased by 3%.

The reported profit equates to earnings per share of 17.5 US cents for the financial year, with the company using some of its vast cash on its balance sheet to pay a 1.7 US cent dividend per share for the quarter. As at the end of June 2012, Resmed had US$809.5 million in cash, with just US$251 million of long-term debt, despite investing 6-7% of its revenues in research and development.

It appears that the message that untreated sleeping related disorders are debilitating and at worst, life threatening is getting out there. Research has shown that people with untreated sleep apnea have a higher risk of dying from cancer, as well as diabetic peripheral neuropathy, a debilitating disease which causes severe pain in the hands and feet.

The company says that there is mounting evidence connecting serious health disorders with untreated sleep-disordered breathing, and wants testing for sleep-disordered breathing to be as common as having one's blood pressure taken.

If the company gets its way in even a few Western countries, its could see the sale of its products skyrocket.

Investors should note that Resmed's primary stock listing is on the New York Stock Exchange, with a secondary listing on the ASX. Shares on the ASX are listed at a ratio of 10:1 to the US listed shares and generally trade around 1/10th of the US shares. As a simple example, each US listed share had US$1.75 in earnings for the year and entitled to a 17 US cent dividend this quarter.

Resmed was an Australian company but has been based in the US for some time now, with operations in more than 70 countries. It is one of a growing number of leading Australian healthcare companies that are in the process of conquering the global market.

Cochlear Limited (ASX: COH), is a leader in the hearing implants market, with a global share estimated at 60%. Blood and plasma products maker CSL Limited (ASX: CSL) is another leader in its field, and has grown its plasma therapies from just $33 million in revenues in 1991 to $3.8 billion in 2011. CSL announced today that CEO Brian McNamee is leaving the company from July 2013 after 23 years at the helm, and you might say, mostly responsible for driving the company's amazing 20-year growth.

Also taking on the world is Australian healthcare company, Sirtex Medical Limited (ASX: SRX) is an innovative liver cancer treatment supplier and aims to become the world leader in that field, as well as believing its technology can be applied to other diseases.

If you're in the market for some high yielding ASX shares, look no further than our "Secure Your Future with 3 Rock-Solid Dividend Stocks" report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King owns shares in Cochlear and CSL. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.