ResMed (NYSE:RMD) is set to report its earnings on Feb 5. Talk of another enviable sector to be in currently – healthcare. Now there is a combination of reasons why this stock makes it worthwhile following in the current market situation, firstly is the importance of medical equipment for treating and diagnosing sleep disordered breathing, the new administration’s healthcare policies as well the stock performance over the past year as well product lineup and market research which point towards the demand of such products.

In the last quarter, the company posted 17% YoY increase in revenues, which was 16% higher than the same quarter in 2007. Growth rates given by the management for this year and next are 23% and 18%, respectively. The continuous positive airway pressure (CPAP) sector is worth $3Bn in the US and the company currently has a 35% market-share of the same. ResMed has bounced back from its 2007 setback when it was forced to spend $US60 million on a mask recall.

The company is also likely to gain from a regulatory change in the US, allowing qualified sleep labs to oversee home testing, avoiding the mega-buck price tag from the past.  The decision to retain qualified labs as gatekeepers was made just as much for health reasons as controlling the rebates claimable on the testing kits.

In the last quarter results the company reiterated that it would continue its stock repurchase program during Q1 with $24.1 million. As of September 30, 2008, the company had repurchased 5.5 million shares in an authorized $8 million share buyback program. Another factor which is monitored for companies in this sector is R&D, which came in at $17.Mn, an increase of 33% over the prior year quarter. Among the projects it is currently investing in is clinical study known as SERVE-HF, which is demonstrating the link between congestive heart failure and SDB, and when you treat that SDB the cardiovascular benefits that can occur. In the last quarter, the company began launching our new VPAP line, which is now in the smaller S8 box. This brings the Easy-Breathe technology into their bilevel product line. Among another launch was the first mask product specifically designed by women and for women, called the Swift LT for Her. This is the first and only gender-specific mask product on the market. Women now represented 30% to 50% of newly diagnosed patients going into certain labs. So it was an important segment that is becoming increasingly important and gives the opportunity to design new products and marketing categories around that vastly growing market, said the company officials.

Looking ahead on a robust set of numbers from this company.

Earnings Estimates
Current Estimates: $0.42
Number of Estimates: 7
High Estimate: $0.44
Low Estimate: $0.38
Last Year EPS: $0.36
Percentage Growth: 17.00 %

Disclosure: The author does not own any of the stocks mentioned above.