ResMed spends big on R&D

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Monday, February 27, 2012

SAN DIEGO - ResMed in January reported $332.7 million in revenue for the second quarter ended Dec. 31, 2011, a 9% increase compared to the same quarter in 2010. It reported a net income of $62.9 million, an 8% increase.

Also of note in the company's earnings: ResMed reported research and development expenditures of $27.2 million for the quarter ended Dec. 31, a 24% increase compared to the same period in 2010. That raised some eyebrows in the investor community.

During a conference call to discuss earnings, ResMed officials explained that the company is making a push in the ventilator market ("they're not cheap to produce") and in the health informatics market. They called these two markets the company's "two main gigs" in this area.

Also during the call:

About that CEO succession plan...

ResMed officials explained that the search to replace Peter Farrell as CEO continues. The company is working with an outside recruiter and a consultant, but they're not "rushing along" and they don't expect to make an announcement in the near future.

The future is HST

ResMed officials expect the market for home sleep testing (HST) to double this year in the Americas, which means the market for auto-setting CPAP devices could also double. They say payers are "getting antsy" for sleep labs and others to adopt the technology, because it will save them money, to the tune of $1,000 per test. "We're trying to put that story together and drive HST as part of that," said Mick Farrell, president of ResMed Americas.

Additionally, ResMed reported $647.5 million in revenue for the six months ended Dec. 31, a 10% increase compared to the same period in 2010. It reported a net income of $113.4 million, a 2% decrease.

Peter Farrell concluded the call by saying: "We continue to be excited about the future prospects for us. We're in the right space."

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