San Diego Business Journal

ResMed Profit Down 11% in 3Q; R&D Expenses Increase

By Kelly Quigley Wednesday, October 26, 2011

ResMed Inc., one of the largest public companies in San Diego, saw net income drop 11 percent in the third quarter — falling short of analysts’ estimates — as the U.S. dollar weakened and the company spent more on growing its product pipeline.

ResMed, which makes medical products for sleep-related breathing disorders, said Oct. 24 that its profit declined to $50.5 million, or 33 cents per share, compared with $56.7 million, or 36 cents, in the third quarter of 2010. Meanwhile, revenue increased 12 percent, to $314.8 million from $282 million.

Analysts, on average, were expecting earnings of 35 cents per share on revenue of $326.3 million.

Quarterly sales in the Americas region rose 9 percent, while sales rose 15 percent in other markets. During the quarter, the company repurchased 4.4 million shares, at a cost of $124.7 million, as part of its ongoing capital management program.

The company said that research and development expenses increased 33 percent from the same time last year. Chairman and CEO Peter C. Farrell noted three new product initiatives launched during the third quarter, including a series of respiratory masks known as “Choices for Her,” which are designed especially for women.

ResMed also began selling its Pixi nasal mask, the first pediatric mask in the industry developed for obstructive sleep apnea in children as young as 2 — a patient population traditionally overlooked, Farrell said.

And finally, ResMed said it entered into an exclusive agreement with San Diego company Skinit Inc. to provide decorative “skins” for patients’ medical devices.

Skinit already provides similar skins for cell phones, laptops and music players. Not only will the decorations make the machines pretty, but they also may help improve therapy, Farrell said.

“Skins can provide a unique opportunity to connect patients personally with their machine early in the process, reconnect with patients who have abandoned therapy and provide an accessories revenue stream for the home care dealer,” he noted.