ResMed share price lifts on double-digit Q2 revenue growth

The ResMed Inc (ASX: RMD) share price is rising in early trade after the company announces strong Q2 2020 revenue growth of 13%.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The ResMed Inc (ASX: RMD) share price rocketed more than 5% higher in early trade after the ASX healthcare company reported its second quarter FY20 results this morning. At the time of writing, Resmed shares are trading for $24.64 per share, up 1.36%.

What were the highlights from ResMed's Q2 report?

ResMed reported strong overall revenue growth of 13% during the second quarter to 31 December to $736.2 million, compared to the prior period.  

Revenue growth was up 14% in constant currency terms. For the half year, revenue also grew strongly, up by 14%, while it grew 15% in constant currency terms. Net operating profit increased by 26% during the quarter.

The company also reported that gross margin for the quarter increased by 50 basis points to 58%. For the half year, gross margin also increased by 50 basis points to reach 57.8%.

Software-as-a-service revenue increased by 37%, compared to the prior year period, due to continued growth in the company's Brightree service offerings and incremental contribution from the acquisition of MatrixCare, which closed in the second quarter of fiscal year 2019.

In the report, ResMed recapped its key announcements during the quarter. These included its collaboration agreement with Cerner Corporation (NASDAQ: CERN), which designated ResMed's Brightree Home Health and Hospice platform as the company's preferred solution to integrate with its electronic health record. ResMed also introduced AirFit N30, the world's first tube-down nasal cradle CPAP mask with a front-facing tube, a brand new option for sleep apnea treatment.

Mick Farrell, ResMed's CEO, commented "[w]e had a strong December quarter with double-digit top-line growth and further gross margin expansion, as well as continued fiscal discipline that resulted in improvements in operating leverage and double-digit growth at the bottom line."

Farrell stated:

We are seeing continued strong customer demand for our new products, particularly in masks and accessories with another quarter of high-teens growth in that category. ResMed is continuing to lead in digital health as we transform lives in out-of-hospital healthcare, leading the innovation of medical devices and software that improve health outcomes, create efficiencies, and reduce overall healthcare system costs. With over 100 million lives improved in 2019, and strong growth ahead, we're well on our way to improving 250 million lives in out-of-hospital healthcare in 2025.

Motley Fool contributor Phil Harpur owns shares of ResMed Inc. The Motley Fool Australia has recommended 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.

More on Share Market News

A male electricity worker in hard hat and high visibility vest stands underneath large electricity generation towers as he holds a laptop computer and gazes up at the high voltage wires overhead.
Share Market News

ASX 200 utilities shares outperform: Are investors switching to defensives?

The utilities sector was the best performing sector by a wide margin last week.

Read more »

A couple cheers as they sit on their lounge looking at their laptop and reading about the rising Redbubble share price
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

two men smiling with a laptop in front of them, symbolising a rising share price.
Broker Notes

These ASX 200 shares could rise 25% to 60%

Analysts think these shares are top buys and could rise materially.

Read more »

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors finished the trading week on a sour note today.

Read more »

Happy teen friends jumping in front of a wall.
Share Gainers

4 ASX 200 stocks smashing the benchmark this week

Investors are sending these four ASX 200 stocks soaring this week. But why?

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Broker Notes

Bell Potter says this growing ASX 200 stock can rise over 40%

Big returns could be on the cards for buyers of this stock.

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Share Market News

Which delivered superior returns in FY25: CSL, A2 Milk, or Telstra shares?

We review the share price growth and dividend income delivered to investors in FY25.

Read more »