On Feb 29, 20Array5, we issued an updated research report on California-based medical equipment manufacturer – ResMed Inc. RMD. The company is a pioneer in the development of generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders.
ResMed delivered a strong second-quarter fiscal 20Array6 beating the Zacks Consensus Estimate on both the top and the bottom line. Moreover, for the fifth quarter in a row, the company successfully posted double-digit revenue growth at CER. Further, foreign currency fluctuation favored ResMed’s earnings growth in the quarter.
With a fast growing global SDB market, ResMed is leaving no stone unturned to expand its foothold here. With this aim in view, in the third quarter, ResMed acquired its Chinese competitor – Curative Medical – a leading provider of non-invasive ventilation and SDB medical devices and accessories. We believe this deal will allow ResMed to expand its business not only in China, but in the majority of the Asia-Pacific region, which is presently deemed the third largest SDB devices market in the world. Currently, the company continues to focus on its target to change 20 million lives by 2020.
Further, the company has been eyeing business expansion in the international market. Apart from the Curative Medical acquisition, the company’s other major acquisitions overseas include Maribo Medico in Denmark. The buyout should help the company to continue to lead in market development in the country and build connected care and digital health solutions for sleep apnea, COPD, neuromuscular disease and beyond. This apart, the company has also acquired a precision tooling company in Sydney to expand its international realm. These strategic investments reflect ResMed’s tireless efforts to expand its international business.
Currently, ResMed continues to invest in high-growth markets like China, India, Brazil and Eastern Europe. Interestingly, in each of these regions, ResMed is implementing long-term strategies to improve patient outcomes and reduce overall system healthcare costs within each individual country.
On the flip side, the failure of the SERVE-HF trial to meet its endpoint in 20Array5 – indicating a letdown on the part of ResMed’s Adaptive Servo-Ventilation (ASV) therapy device – weighed heavily on the stock. In addition, reimbursement issues and competitive bidding continue to affect the stock.
Currently, ResMed carries a Zacks Rank #3 (Hold).
Key Picks in the Sector
Some better-ranked medical product stocks are Hill-Rom Holdings, Inc. HRC, LeMaitre Vascular, Inc. LMAT and OraSure Technologies, Inc. OSUR. All the three sport a Zacks Rank #Array (Strong Buy).
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