ResMed Inc. (RMD), CareFusion Corporation (CFN) – A Healthcare Stock With an Interesting Value Proposition, Part Two

Page 1 of 2

In the previous section of this article, there was a detailed discussion about ResMed Inc. (NYSE:RMD) and its excellent market position, how well it has been paying dividends (almost always an indication of a mature company), and how its technology is being utilized to treat new indications. In this section, I will conclude with a look at its global growth prospects and its competitors.

Product sales driving growth across geographies for ResMed
One of the most important aspects of ResMed Inc. (NYSE:RMD)’s business strategy is the way it has spread across the globe. The company started out in Australia, so it has a natural edge in that market. However, the company has presence across 20-odd countries and is very prominent in emerging markets like India, China, and Brazil. It also makes more than 40% of its revenue from these markets, including Europe, and about 60% from the U.S.

ResMed Inc. (NYSE:RMD)

Its latest earnings were quite impressive. It posted revenue of $414.6 million in the last reported quarter. The year before, it had $372 million — so that is an 11% increase at constant currency.

Its products, both flow generators and masks, are seeing increasing sales in both home and hospital care. These products are not restricted to the U.S. or Australia alone. ResMed Inc. (NYSE:RMD) has approvals to sell these products in dozens of countries worldwide. Its revenue being spread across geographies reflects that multi-dimensional approach.

Last quarter, it made $230 million from the U.S. and $184 million from the rest of the world. APAC regions showed double-digit growth in revenue. This tells me that the company is evenly spread out. There was 16% growth in flow generators to $104.7 million, and 7% for masks and other products to $125.6 million. This is also indicative of how its portfolio is performing.

The company’s bottom line performed well due to significant growth in operating income, which increased 24% this year. Revenue for the whole year was $1.5 billion, a 12% increase at constant currency. The company has considerable cash reserves of $876 million, and offered a 20% return on equity overall. Broadly, this is a solid company with sound management and strong business approach, and I see long-term benefits from buying into it.

Competitive landscape
Philips Respironics and ResMed Inc. (NYSE:RMD) together comprise nearly 70% of the sleep apnea devices market. Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) is a global player that has been in the emerging markets for decades. ResMed Inc. (NYSE:RMD) has a better chance of fighting its competition in the U.S. market than elsewhere. However, it has done considerably well so far.

Philips Respironics, a subsidiary of Koninklijke Philips Electronics NV (ADR) (NYSE:PHG), provides innovative solutions for the treatment of sleep and respiratory diseases. It has three groups: sleep and home respiratory, hospital, and international. Sleep and home respiratory includes home respiratory care, SDB, sleep well ventures, and respiratory drug delivery.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!