ResMed delivers another year of strong growth

The ResMed Inc. (ASX:RMD) share price could be on the rise today after the release of a strong full year result…

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The ResMed Inc. (ASX: RMD) share price will be one to watch on Friday following the release of the sleep treatment-focused medical device company's fourth quarter and full year update.

How did ResMed perform in the fourth quarter and FY 2019?

In the fourth quarter ResMed reported a 13% increase in revenue to US$705 million, leading to the company posting an 11% increase in full year revenue to US$2.6 billion. In constant currency terms, revenue was up 15% for the quarter and 13% for the year.

Another positive was that the company's gross margin expanded by 120 basis points in the fourth quarter to 59.3%. For the full year its gross margin improved by 80 basis points to 59%.

Full year GAAP diluted earnings per share came in at US$2.80, with non-GAAP diluted earnings per share up to US$3.64. And net operating profit increased 7% and non-GAAP operating profit rose by 18% year on year.

ResMed's CEO, Mick Farrell, said: "We finished fiscal year 2019 with double-digit revenue growth to $2.6 billion and operating profit up 18% on a non-GAAP basis. Recent mask launches have driven market share gains while continued adoption of our SaaS solutions is driving both revenue growth and a steady margin profile."

He added: "We delivered another quarter of operating leverage, which gives us flexibility as we execute on our long-term strategy to provide innovative products, software, and solutions to improve health outcomes, create efficiencies, and reduce overall healthcare system costs. Our pipeline is solid; we are well-positioned as we enter fiscal year 2020 on a trajectory to improve 250 million lives in out-of-hospital healthcare in 2025."

How does this compare to expectations?

Based on the research notes I have seen, ResMed's result appears to have just about lived up to the expectations of the market.

Though analysts at Credit Suisse may be a touch disappointed. A recent note revealed that its analysts were expecting the company to report a 15% increase in full year revenue (in constant currency terms) and an 8% lift in earnings.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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