ResMed (RMD 0.70%) reported its fiscal fourth-quarter and full-year results on Thursday, Aug. 2. Sales growth topped 12% during the period thanks in large part to strength in masks and accessories. At the same time, management continued to demonstrate disciplined expense control. The combination helped drive a 24% boost to net income. The broad-based prosperity allowed the company's board to increase the quarterly dividend payment by 6%. 

The words "sleep apnea" on medical chart

Image source: Getty Images.

ResMed's fiscal fourth quarter: The raw numbers

Metric

Q4 2018

Q4 2017

Change (YOY)

Sales

$623.6 million

$556.7 million

12%

Non-GAAP net income

$136.2 million 

$109.6 million

24%

Non-GAAP earnings per share

$0.95

$0.77

23%

Data source: ResMed. GAAP = generally accepted accounting principles.

What happened with ResMed this quarter?

  • Revenue grew 10% in North America and 9% in Europe and Asia. 
  • In currency-neutral terms, devices grew 8% while masks and accessories grew 13%.
  • Revenue from its Brightree software-as-a-service business grew 12% to $40.4 million. Management announced that it recently purchased an electronic health records company called HEALTHCAREfirst in an effort to continue to build out its software offering. 
  • Operating expenses grew at a low single-digit rate during the period. This was slower than overall sales growth and helped drive significant operating leverage. 
  • Non-GAAP net income growth remained strong thanks to expense control and favorable changes to the U.S. tax code. 
  • Stock buybacks totaled $25.9 million, or 250,000 shares, during the period.
  • The dividend was raised by 6%. The new quarterly payout is $0.37 per share.
  • ResMed announced a joint venture with Alphabet that is designed to help the hundreds of millions of undiagnosed sleep apnea patients around the world get diagnosed and find treatment solutions that meet their needs. 

Zooming out to the full year, here's an overview of the company's key achievements:

  • Revenue jumped 13% to $2.3 billion. 
  • Non-GAAP net income rose 27% to $507.8 million.
  • Non-GAAP EPS increased 25% to $3.53.

What management had to say

CEO Mick Farrell was proud of how his company performed during the fiscal year:

We closed out the year with strong performance across all aspects of our business, from solid top-line revenue growth -- driven by geographically balanced results across our entire portfolio of offerings -- to continued improvements in operating leverage, which has resulted in double-digit bottom-line growth.

He also reaffirmed that the company is in great shape to continue driving strong results into the future:

We continue to advance our cloud-connected medical device strategy and are growing our cloud-based software-as-a-service business. Our clinical studies and research efforts are being recognized, and the opportunity to increase awareness of sleep-related breathing disorders and improve patient quality of life is bigger than ever.

Looking forward

CFO Brett Sandercock doesn't share guidance with investors, but he did state that the company's effective tax rate in fiscal 2019 is expected to land between 22% and 24%.

Farrell ended his prepared remarks on the conference call with investors by stating that the company remains well positioned to achieve its long-term targets:

We are positioning ResMed for the long term, driving top-line and bottom-line growth into 2020 and well beyond. We're going to execute on our strategy to lead the medtech field to create value with digital health solutions to slow chronic disease progression, to also reduce overall healthcare system costs, and most importantly, to improve outcomes and quality of life for our ultimate customer, the patients.