ResMed Inc is an Australian/US company which is the world's second-biggest maker of products to treat sleep disorders.
For a number of years, it has been something of a glamour stock here because of its strong growth and cutting edge technology. But 2007 hasn't been the best of years and the financial year and fourth quarter results, reported yesterday, saw the company shares slump 32 cents, or 6.1%, to $4.90.
The company's fourth-quarter profit missed analysts' estimates with net income up 20% to $27.7 million in the three months ended June 30, as compared to the last quarter of 2006.
That was slightly below estimates from analysts.
Overall sales in the Americas in the fourth quarter rose 10% but growth was hurt by a product recall initiated in the fourth quarter, which Resmed still expects to have an impact in the next year but at a lesser level.
Sales in the rest of the world lifted 14%.
"While we are not satisfied with our Q407 (fourth quarter of fiscal 2007) results, we had a robust fiscal year 2007, and we remain optimistic about our growth moving forward," ResMed chief executive, Dr Peter Farrell, said.
ResMed said net profit in 2007 financial year was $US66.3 million ($A77.66 million), compared to $US88.2 million ($A103.31 million) the year before.
ResMed's net profit for the fourth quarter of 2006/07 rose to $US27.7 million from $US23.1 million in the prior corresponding period.
Dr Farrell said ResMed had set up three distinct strategic business units to streamline the management of the company's various products and improve alignment with market expansion opportunities.
In fiscal 2008, he said ResMed plans to expand its market development initiatives in cardiology, diabetes and occupational health, launching new products in the mask and flow generator segments.
"I am encouraged that we are beginning to lift the veil of ignorance of sleep-disordered breathing and remain optimistic about our continued organic growth in the years ahead," he said.
ResMed's net revenue for the year ended June 30, 2007, was $US716.3 million as compared to $US606.9 million in 2006.
In April, ResMed announced a worldwide voluntary recall of about 300,000 S8 flow generators used for the treatment of obstructive sleep apnea.
The recall of the airflow generators, made between July 2004 and May 15, 2006, was sparked by a "remote potential" for a short circuit, ResMed had said.
Expenses for the voluntary product recall, which were estimated at $US59.7 million, were recognised in ResMed's third quarter accounts.
The company said: "Inventory at US$157.2 million as of June 30, 2007, was comparable to March 31, 2007 level of US$156.9 million. Accounts receivable days sales outstanding, at 77 days, increased from the March 31, 2007 quarter of 73 days.
"Sales growth for the Americas were impacted by challenging year ago comparables when we grew by 44% and a product recall initiated during the current year's quarter. Rest of world sales totalled US$92.8 million, a 14% increase over last year.
"Operating cash flow for the June quarter was an encouraging US$27.1 million. While we are not satisfied with our Q407 results, we had a robust fiscal year 2007, and we remain optimistic about our growth moving forward," Dr Farrell said in a statement.
"We are encouraged by the initial response to our newly-launched full face masks: Quattro and Liberty, with strong early sales achieved by these innovative products. We saw continued growth in Adapt SV sales with complex sleep apnea continuing to gain recognition within the sleep community.
"In fiscal 2008, we plan to expand our market development initiatives in cardiology, diabetes and occupational health and we will also launch a number of new products in the mask and flow generator segments. I am encouraged that we are beginning to lift the veil of ignorance of sleep-disordered breathing and remain optimistic about our continued organic growth in the years ahead."
