There were plenty of questions earlier this year about how the COVID-19 pandemic might impact ResMed (RMD -0.07%). It's fair to say that most of the concerns have been put to rest. ResMed's shares are up more than 20% year to date.
The company announced its fiscal 2020 fourth-quarter results after the market closed on Wednesday. Here are the highlights from ResMed's Q4 update.
By the numbers
ResMed reported revenue in the fourth quarter of $770.3 million, up 9% year over year. This result easily beat the consensus Wall Street revenue estimate of $746.9 million.
The company announced Q4 net income of $177.8 million, or $1.22 per share, based on generally accepted accounting principles (GAAP). This marked a big increase from ResMed's GAAP earnings of $68.8 million, or $0.48 per share, posted in the prior-year period.
ResMed's bottom line also improved tremendously on a non-GAAP basis. The company recorded adjusted earnings of $193.3 million, or $1.33 per share, compared to $137.6 million, or $0.95 per share, in the same period in 2019. This crushed the average analysts' adjusted earnings estimate of $1.08 per share.
Behind the numbers
The best news for ResMed in Q4 came from outside the Western hemisphere. Revenue in Europe, Asia, and other markets jumped 22% year over year on a constant-currency basis. The strong growth resulted from the COVID-19 pandemic driving increased demand for its ventilators.
ResMed's software-as-a-service (SaaS) revenue grew by 7% over the prior-year period. The company attributed this increase to "continued growth in resupply service offerings and stabilizing patient flow in out-of-hospital care settings."
Closer to home, ResMed's sales in the U.S., Canada, and Latin America (excluding its SaaS businesses) rose 4% year over year. The coronavirus outbreak also fueled this increase, with ResMed reporting higher sales for its mask products and rising demand for its ventilators.
While the solid revenue growth helped boost the company's bottom line, ResMed also held the line on spending. Its selling, general, and administrative expenses fell 4% year over year in part because of savings on travel and in other areas resulting from the COVID-19 pandemic.
ResMed CEO Mick Farrell stated, "Sleep labs and physician practices are reopening across many geographies, and we're seeing accelerated adoption of digital health solutions which supports our long-term strategy." That's encouraging for ResMed's prospects throughout the rest of 2020. However, the COVID-19 pandemic remains something of a wild card for the healthcare stock.
One thing that ResMed shareholders can look forward to with certainty is the company's quarterly dividend. ResMed's board of directors declared a cash dividend of $0.39 per share payable on Sept. 4, 2020 to shareholder on record as of Aug. 20, 2020.