ResMed hikes dividend as profits climb; shares tumble as growth stocks hammered

ResMed (ASX: RMD) continues to flex its market leading position in the sleep apnea and respiratory space, growing FY22 revenues by 12% to US$3.6bn, slightly ahead of analyst expectations.

ResMed shares tumbled -5.8% in early trade. Prior to the selloff, the stock rallied 25.6% from late May lows.

Results at a glance:

Source: ResMed | Table: Market Index

Ongoing PAP shortage

A major product recall from Philips sparked an industry-wide shortage in positive airway pressure (PAP) machines last June.

Philips recalled over 20 PAP models due to sound-reducing foam in its devices that could potentially break down and enter users' airways or release harmful chemicals.

During the quarter, ResMed said it introduce its "newest device to meet the needs of an industry crisis in PAP supply, the AirSense 10 Card-to-Cloud solution." In addition to other new product launches across Europe and the United States.

Still, Morgans flagged that the global semiconductor shortage "has crimped growth, shaving US$100m of incremental revenue from Philips' device recall on supplier decommits and enacted force majeure."

Looking ahead, Morgans expects supply constraints to somewhat alleviate next year, projecting FY23 revenue growth of 8.4% to US$4.34bn.

Margins and dividends on the rise

Gross margins improved by 110 basis points in the fourth quarter as higher average selling prices and favourable product mix changes offset higher freight and manufacturing costs.

ResMed raised its quarterly dividend by 5% to 44 US cents per share. The stock will go ex-dividend on Wednesday, 17 August.

ResMed share price chart