NONOF - ResMed hits 52-week low after Q4 miss

2023-08-04 13:06:37 ET

ResMed ( NYSE: RMD ) fell 17% on Friday to reach a 52-week low after the respiratory device maker reported lower than expected financials for Q4 fiscal 2023 despite challenges faced by its top competitor, Philips ( PHG ).

Days ago, the Dutch medical device maker, which is reeling from a major recall of its sleep care devices, increased its full-year outlook after positing modest top- and bottom-line beats with its Q2 2023 financials.

In the case of ResMed ( RMD ), the company missed consensus estimates even after adding $1.1B in revenue with 23% YoY growth and increasing its adj. diluted EPS by ~7% YoY to $1.60.

While the San Diego, California-based medical device maker didn’t issue revenue guidance for fiscal 2024, it expected full-year SG&A and R&D expenses to reach 20%–22% and 7%–8% of revenue, respectively, roughly in line with FY23.

"So we're expecting pretty robust cash flow generation through each of the quarters in FY2024. And we'll continue to work hard on the working capital and bringing that down," CFO Brett Sandercock remarked.

When asked about the impact of popular weight loss drugs on the sleep care market, CEO Mick Farrell argued that the cost, adherence, and side effects could hurt the demand for the drug class known as GLP-1 agonists, marketed by the likes of Novo Nordisk ( NVO ). "I think it's a long road to play out here," he added.

In a recent report, Morgan Stanley projected that GLP-1's impact could even extend to respiratory care devices marketed by ResMed ( RMD ) and Philips ( PHG ).

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