ResMed (NYSE:RMD), a medical device company focused on equipment for treating sleep apnea and other respiratory diseases, reported its fiscal first-quarter 2019 results on Thursday. Sales grew by double-digit percentages yet again, while expense control enabled net income to grow even faster.

Woman putting sleep apnea mask on

Image source: Getty Images.

ResMed's fiscal first quarter: The raw numbers

Metric

Fiscal Q1 2019

Fiscal Q1 2018

Change (YOY)

Sales

$588.3 million

$523.7 million

12%

Non-GAAP net income

$116.3 million 

$94.1 million

23%

Non-GAAP earnings per share

$0.81

$0.66

23%

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

What happened this quarter?

  • Sales increased 10% in North America. International sales rose 16% in currency neutral terms.
  • Software revenue grew 25%, aided by the company's recent acquisition of HEALTHCAREfirst for $126 million, a deal that closed during the quarter.
  • Average selling prices decreased slightly, which took a slight toll on gross margins.
  • Selling, general, and administrative expenses only grew by 4% after adjustments for foreign currency movements. That was a much lower rate than its revenue growth, a disparity that helped drive its huge jump in net income. 
  • Management spent $22.8 million on stock buybacks, and another $52.8 million was returned to shareholders through the company's recently increased dividend.
  • Doctors are now monitoring 8 million patients via AirView, the company's cloud-based system for managing patients with sleep-disordered breathing. 

What management had to say

In a press release, CEO Mick Farrell noted that the strong top-line gains were driven by growth across the company's portfolio. He also boasted that it continues to find new ways to distinguish itself in the market:

During the quarter we expanded our product portfolio with new masks and made ongoing upgrades to our digital health solutions, separating ResMed from the competition. We provide customers with services and solutions to help improve patient outcomes, create efficiencies, and reduce overall healthcare system costs.

Looking forward

CFO Brett Sandercock stated that the recently announced joint venture with Verily -- the healthcare arm of tech giant Alphabet -- had received all of the required approvals, and expects to commence commercial operations in the fiscal second quarter. He didn't have any hard numbers yet to share with investors on how the venture will affect the company's finances, but said he will share more details on the next earnings call.

Farrell closed out his commentary on the earnings call by stating that ResMed remains well-positioned for the years ahead:

The continued success of our current mask and device portfolio, along with a solid pipeline of new products and enhanced connected health solutions for sleep apnea, COPD, and out-of-hospital medical software markets, give us confidence in ongoing momentum as we move throughout the year.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Brian Feroldi owns shares of Alphabet (A shares) and Alphabet (C shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool recommends ResMed. The Motley Fool has a disclosure policy.