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 man in a blue collared shirt sits at his desk doing a single fist pump as he watches the Appen share price rise on his laptop
Broker Notes

These ASX 200 stocks could rise 30% to 40%

Analysts are tipping these shares to go to the moon. Let's find out why.

Read more »

A man and woman dance back to back as they cook in kitchen.
Share Market News

ASX 200 'safe-haven' shares delivered divergent performances last week

ASX 200 utilities shares lifted while healthcare shares tanked last week.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
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 »

A businessman hugs his computer and smiles.
Opinions

2 ASX 300 shares I plan to own forever

Both of these businesses have good ultra-long-term outlooks.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

$10,000 invested in the ASX 200 5 years ago is now worth…

Guess how much $10,000 invested in the ASX 200 five years ago is worth today!

Read more »

Retired couple hugging and laughing.
Share Market News

Eyeing retirement: Do you really need $1 million?

AustralianSuper recently weighed in.

Read more »

Happy woman working on a laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a pleasant end to the trading week for investors this Friday.

Read more »

Close-up of a business man's hand stacking gold coins into piles on a desktop.
Opinions

If I had a big cash pile like Warren Buffett, here's how I'd spend it in 2025

I'd put Buffett's billions to work straight away.

Read more »