2023-10-26 18:22:14 ET
Shares of ResMed ( NYSE: RMD ) on Thursday slumped as much as 10.7% in extended trading, after the medical device company's quarterly gross margins came under pressure and its revenue missed estimates.
RMD stock had pared some of its after hours losses. It was last down 4.9% to $132.
The company posted FQ1 2024 adjusted earnings per share of $1.64, which beat estimates by 2 cents. Revenue rose 16% Y/Y to $1.1B, but came in below consensus by $10M.
RMD's FQ1 gross margin decreased 250 basis points Y/Y to 54.5%, while non-GAAP gross margin fell 160 basis points to 56%. According to the company, the contraction was mainly due to costs associated with a field safety notification on its Astral ventilators, along with higher component and manufacturing costs.
San Diego, Calif.-based ResMed ( RMD ) develops medical devices that makes sleeping and ventilation easier. Its continuous positive airway pressure machines help patients with sleep apnea.
ResMed ( RMD ) back in August delivered a similar Q2 earnings report, with revenue missing expectations and gross margins coming under pressure.
However, the company's top boss Mick Farrell reiterated his confidence that ResMed ( RMD ) would be able to achieve its goal of "improving" 250M lives in 2025.
"We've begun rolling out AI-driven software products into our digital health ecosystem, which I believe will create a new class of offerings that will allow us to continue to drive long-term, profitable growth," Farrell added in a statement .
ResMed ( RMD ) competes with Philips ( PHG ) in the sleep devices market. The Dutch conglomerate is in the middle of completing a major recall of its Respironics machines, and in its latest quarterly report on Monday said that over 99% of "sleep therapy device registrations that are complete and actionable have been remediated."
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ResMed stock declines after hours on FQ1 revenue miss, gross margin contraction