- Year-over-year revenue grows 13%, gross margin improves 120
basis points, non-GAAP operating profit up 18%
- Quarterly dividend increases 5% to $0.39 per share
- ResMed well-positioned for first quarter fiscal year 2020 and
beyond
Note: A webcast of
ResMed’s conference call will be available at 4:30
p.m. ET today at http://investor.resmed.com
ResMed Inc. (NYSE: RMD, ASX: RMD), a world-leading connected
health company, today announced results for its quarter ended June
30, 2019.
Fourth Quarter 2019 Highlights
- Revenue increased 13% to $705.0 million; up 15% on a constant
currency basis
- Gross margin expanded 120 bps to 59.3%
- Net operating profit decreased 18%; non-GAAP operating profit
up 18%
- GAAP diluted earnings per share of $0.48; non-GAAP diluted
earnings per share of $0.95
- Quarterly dividend increased by 5% to $0.39 per share
Full Year 2019 Highlights
- Revenue increased 11% to $2.6 billion; up 13% on a constant
currency basis
- Gross margin expanded 80 bps to 59.0%
- Net operating profit increased 7%; non-GAAP operating profit up
18%
- GAAP diluted earnings per share of $2.80; non-GAAP diluted
earnings per share of $3.64
“We finished fiscal year 2019 with double-digit revenue growth
to $2.6 billion and operating profit up 18% on a non-GAAP basis.
Recent mask launches have driven market share gains while continued
adoption of our SaaS solutions is driving both revenue growth and a
steady margin profile,” said Mick Farrell, ResMed’s CEO. “We
delivered another quarter of operating leverage, which gives us
flexibility as we execute on our long-term strategy to provide
innovative products, software, and solutions to improve health
outcomes, create efficiencies, and reduce overall healthcare system
costs. Our pipeline is solid; we are well-positioned as we enter
fiscal year 2020 on a trajectory to improve 250 million lives in
out-of-hospital healthcare in 2025.”
Financial Results and Operating Metrics Unaudited; $ in
millions, except for per share amounts
Three Months Ended
June 30, 2019
June 30, 2018
% Change
Constant Currency (A)
Revenue
$
705.0
$
623.6
13
%
15
%
Gross margin
59.3
%
58.1
%
2
Selling, general and administrative
expenses
171.6
156.8
9
14
Research and development expenses
51.1
39.7
29
32
Income from operations
121.1
146.9
(18)
Non-GAAP income from operations (B)
196.2
166.0
18
Net income
68.8
109.8
(37)
Non-GAAP net income (B)
137.6
136.3
1
Diluted earnings per share
$
0.48
$
0.76
(37)
Non-GAAP diluted earnings per share
(B)
$
0.95
$
0.95
-
Twelve Months Ended
June 30, 2019
June 30, 2018
% Change
Constant Currency (A)
Revenue
$
2,606.6
$
2,340.2
11
%
13
%
Gross margin
59.0
%
58.2
%
1
Selling, general and administrative
expenses
645.0
600.4
7
11
Research and development expenses
180.7
155.1
16
20
Income from operations
579.3
541.8
7
Non-GAAP income from operations (B)
716.3
606.6
18
Net income
404.6
315.6
28
Non-GAAP net income (B)
526.4
507.8
4
Diluted earnings per share
$
2.80
$
2.19
28
Non-GAAP diluted earnings per share
(B)
$
3.64
$
3.53
3
(A)
In order to provide a framework for
assessing how our underlying businesses performed excluding the
effect of foreign currency fluctuations, we provide certain
financial information on a “constant currency basis”, which is in
addition to the actual financial information presented. In order to
calculate our constant currency information, we translate the
current period financial information using the foreign currency
exchange rates that were in effect during the previous comparable
period. However, constant currency measures should not be
considered in isolation or as an alternative to U.S. dollar
measures that reflect current period exchange rates, or to other
financial measures calculated and presented in accordance with U.S.
GAAP.
(B)
See the reconciliation of non-GAAP
financial measures in the table at the end of the press
release.
Discussion of Fourth Quarter Results
- Revenue in the U.S., Canada, and Latin America, excluding
Software as a Service, grew by 11 percent compared to the prior
year period, driven by strong sales across our mask and device
product portfolios.
- Revenue in combined Europe, Asia and other markets grew by 4
percent on a constant currency basis compared to the same period of
the prior year. Mask sales were strong across these markets. As
expected, device sales in France and Japan were impacted as
customers completed their connected device upgrade programs. Device
sales outside France and Japan grew well.
- Software as a Service revenue increased by 111 percent,
compared to the prior year period, due to continued growth in
Brightree service offerings and incremental contribution from the
acquisition of MatrixCare, which closed in the second quarter, and
HEALTHCAREfirst, which closed in the first quarter.
- Gross margin expanded by 120 basis points over the prior year
period, primarily due to higher margin contribution from
MatrixCare, benefits from manufacturing and procurement
efficiencies, partially offset by declines in average selling
prices.
- Selling, general, and administrative expenses increased by 9
percent compared to the prior year period, or by 14 percent on a
constant currency basis. Excluding the impact of recent
acquisitions, selling, general and administrative expenses
increased by 3 percent on a constant currency basis. SG&A
expenses improved to 24.3 percent of revenue in the quarter,
compared with 25.1 percent in the same period of the prior
year.
- Income from operations decreased by 18 percent and non-GAAP
income from operations increased by 18 percent compared to the
prior year period.
- Net income and diluted earnings per share both decreased by 37
percent, predominantly attributable to the impact of legal
settlement expenses of $41.2 million, recent acquisitions,
restructuring expenses, and higher interest charges compared to the
prior year quarter.
- Non-GAAP net income grew by 1 percent and non-GAAP diluted
earnings per share were the same compared with the prior year
quarter.
- Cash flow from operations for the quarter was $141.8 million,
compared to net income in the current quarter of $68.8 million.
During the quarter we paid $53.1 million in dividends.
Other Business and Operational Highlights
- Introduced AirFit P30i, ResMed’s second top-of-head connected
CPAP mask, now in a nasal pillows option, further expanding the
mask portfolio with options providing even more flexibility and
choice to help users sleep better in any position.
- Expanded Brightree’s suite of HME solutions, now offering an
Analytics Suite for HMEs and a resupply solution for three new
categories outside of sleep therapy.
- Led or sponsored a combined total of 40 studies at the ATS 2019
International Conference and SLEEP 2019, further establishing
ResMed’s medical research leadership with new insights into the
effects and treatment of sleep apnea, COPD, and asthma.
Dividend program
The ResMed board of directors today declared a quarterly cash
dividend of $0.39 per share, an increase of 5% compared to the most
recent quarterly dividend of $0.37 per share. The dividend will
have a record date of August 15, 2019, payable on September 19,
2019. The dividend will be paid in U.S. currency to holders of
ResMed’s common stock trading on the New York Stock Exchange.
Holders of Chess Depositary Instruments trading on the Australian
Securities Exchange will receive an equivalent amount in Australian
currency, based on the exchange rate on the record date, and
reflecting the 10:1 ratio between CDIs and NYSE shares. The
ex-dividend date will be August 14, 2019 for common stockholders
and for CDI holders. ResMed has received a waiver from the ASX’s
settlement operating rules, which will allow ResMed to defer
processing conversions between its common stock and CDI registers
from August 14, 2019 through August 15, 2019, inclusive.
Webcast details
ResMed will discuss its fourth quarter fiscal year 2019 results
on its webcast at 1:30 p.m. U.S. Pacific Time today. The live
webcast of the call can be accessed on ResMed’s Investor Relations
website at investor.resmed.com. Please go to this section of the
website and click on the icon for the “Q4 2019 Earnings Webcast” to
register and listen to the live webcast. A replay of the earnings
webcast will be accessible on our website and available
approximately two hours after the live webcast. In addition, a
telephone replay of the conference call will be available
approximately two hours after the webcast by dialing +1
800-585-8367 (U.S.) or +1 416-621-4642 (outside U.S.) and entering
the passcode 2699213. The telephone replay will be available until
August 8, 2019.
About ResMed
At ResMed (NYSE: RMD, ASX: RMD) we pioneer innovative solutions
that treat and keep people out of the hospital, empowering them to
live healthier, higher-quality lives. Our cloud-connected medical
devices transform care for people with sleep apnea, COPD and other
chronic diseases. Our comprehensive out-of-hospital software
platforms support the professionals and caregivers who help people
stay healthy in the home or care setting of their choice. By
enabling better care, we improve quality of life, reduce the impact
of chronic disease and lower costs for consumers and healthcare
systems in more than 120 countries. To learn more, visit ResMed.com
and follow @ResMed.
Safe harbor statement
Statements contained in this release that are not historical
facts are “forward-looking” statements as contemplated by the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements – including statements regarding
ResMed’s projections of future revenue or earnings, expenses, new
product development, new product launches, new markets for its
products, the integration of acquisitions, litigation, and tax
outlook – are subject to risks and uncertainties, which could cause
actual results to materially differ from those projected or implied
in the forward-looking statements. Additional risks and
uncertainties are discussed in ResMed’s periodic reports on file
with the U.S. Securities & Exchange Commission. ResMed does not
undertake to update its forward-looking statements.
RESMED INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited; $
in thousands, except for per share amounts)
Three Months Ended
Twelve Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Net revenue
$
704,964
$
623,631
$
2,606,572
$
2,340,196
Cost of sales
287,114
261,159
1,069,987
978,032
Gross profit
$
417,850
$
362,472
$
1,536,585
$
1,362,164
Operating expenses:
Selling, general and administrative
171,600
156,810
645,010
600,369
Research and development
51,138
39,657
180,651
155,149
Amortization of acquired intangible assets
(1)
23,437
11,611
74,938
46,383
Restructuring expenses (1)
9,401
7,510
9,401
18,432
Litigation settlement expenses (1)
41,199
-
41,199
-
Acquisition related expenses (1)
-
-
6,123
-
Total operating expenses
$
296,775
$
215,588
$
957,322
$
820,333
Income from operations (1)
121,075
146,884
579,263
541,831
Other income (expenses), net:
Interest income (expense), net
$
(12,264)
$
(2,780)
$
(33,857)
$
(11,977)
Loss attributable to equity method
investments
(6,463)
-
(15,833)
-
Other, net
(6,587)
(3,185)
(10,726)
(8,542)
Total other income (expenses), net
(25,314)
(5,965)
(60,416)
(20,519)
Income before income taxes
$
95,761
$
140,919
$
518,847
$
521,312
Income taxes
26,964
31,107
114,255
205,724
Net income
$
68,797
$
109,812
$
404,592
$
315,588
Basic earnings per share
$
0.48
$
0.77
$
2.83
$
2.21
Diluted earnings per share
$
0.48
$
0.76
$
2.80
$
2.19
Non-GAAP diluted earnings per share
(1)
$
0.95
$
0.95
$
3.64
$
3.53
Basic shares outstanding
143,435
142,793
143,111
142,764
Diluted shares outstanding
144,687
144,004
144,484
143,987
(1)
See the reconciliation of non-GAAP
financial measures in the table at the end of the press
release.
RESMED INC. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited; $ in
thousands)
June 30, 2019
June 30, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
147,128
$
188,701
Accounts receivable, net
528,484
483,681
Inventories
349,641
268,701
Prepayments and other current assets
120,113
124,634
Total current assets
$
1,145,366
$
1,065,717
Non-current assets:
Property, plant and equipment, net
$
387,460
$
386,550
Goodwill and other intangibles, net
2,378,399
1,284,128
Deferred income taxes and other
non-current assets
196,457
327,528
Total non-current assets
$
2,962,316
$
1,998,206
Total assets
$
4,107,682
$
3,063,923
LIABILITIES AND STOCKHOLDERS’
EQUITY:
Current liabilities:
Accounts payable
$
115,725
$
92,723
Accrued expenses
266,359
185,805
Deferred revenue
88,667
60,828
Income taxes payable
73,248
160,427
Short-term debt
11,992
11,466
Total current liabilities
$
555,991
$
511,249
Non-current liabilities:
Deferred revenue
$
81,143
$
71,596
Deferred income taxes
11,380
13,084
Other long term liabilities
2,058
924
Long-term debt
1,258,861
269,988
Long-term income taxes payable
126,056
138,102
Total non-current liabilities
$
1,479,498
$
493,694
Total liabilities
$
2,035,489
$
1,004,943
STOCKHOLDERS’ EQUITY:
Common stock
$
575
$
571
Additional paid-in capital
1,511,473
1,450,821
Retained earnings
2,436,410
2,432,328
Treasury stock
(1,623,256)
(1,600,412)
Accumulated other comprehensive income
(253,009)
(224,328)
Total stockholders’ equity
$
2,072,193
$
2,058,980
Total liabilities and stockholders'
equity
$
4,107,682
$
3,063,923
RESMED INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited; $ in thousands)
Twelve Months Ended
June 30, 2019
June 30, 2018
Cash flows from operating
activities:
Net income
$
404,592
$
315,588
Adjustment to reconcile net income to cash
provided by operating activities:
Depreciation and amortization
150,795
119,960
Stock-based compensation costs
52,073
48,412
Loss attributable to equity method
investments
15,833
-
Impairment of equity investments
15,007
11,593
Gain on previously held equity
interest
(1,909)
-
Changes in fair value of business
combination contingent consideration
(286)
411
Changes in operating assets and
liabilities, net of effect of acquisitions:
Accounts receivable, net
(18,013)
(32,356)
Inventories, net
(84,188)
1,494
Prepaid expenses, net deferred income
taxes and other current assets
(47,575)
(160,726)
Accounts payable, accrued expenses and
other
(27,278)
200,650
Net cash provided by operating
activities
$
459,051
$
505,026
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(68,710)
(62,581)
Patent registration costs
(8,632)
(8,876)
Business acquisitions, net of cash
acquired
(951,383)
(902)
Purchases of investments
(46,717)
(14,495)
Proceeds / (Payments) on maturity of
foreign currency contracts
(264)
(14,970)
Net cash used in investing activities
$
(1,075,706)
$
(101,824)
Cash flows from financing
activities:
Proceeds from issuance of common stock,
net
36,727
38,717
Taxes paid related to net share settlement
of equity awards
(28,104)
(15,385)
Purchases of treasury stock
(22,844)
(53,801)
Payment of business combination contingent
consideration
(909)
(486)
Proceeds from borrowings, net of borrowing
costs
1,519,230
350,000
Repayment of borrowings
(711,745)
(1,146,242)
Dividends paid
(211,712)
(199,497)
Net cash (used in) / provided by financing
activities
$
580,643
$
(1,026,694)
Effect of exchange rate changes on
cash
$
(5,561)
$
(9,742)
Net increase / (decrease) in cash and cash
equivalents
(41,573)
(633,234)
Cash and cash equivalents at beginning of
period
188,701
821,935
Cash and cash equivalents at end of
period
$
147,128
$
188,701
RESMED INC. AND
SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited;
$ in thousands, except for per share amounts)
The measure, “non-GAAP income from operations” is reconciled
with GAAP income from operations below:
Three Months Ended
Twelve Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
GAAP income from operations
$
121,075
$
146,884
$
579,263
$
541,831
Amortization of acquired intangible assets
(A)
23,437
11,611
74,938
46,383
Deferred revenue fair value adjustment
(A)
1,065
-
5,348
-
Restructuring expenses (A)
9,401
7,510
9,401
18,432
Litigation settlement expenses (A)
41,199
-
41,199
-
Acquisition related expenses (A)
-
-
6,123
-
Non-GAAP income from operations
$
196,177
$
166,005
$
716,272
$
606,646
The measures "non-GAAP net income" and
“non-GAAP diluted earnings per share” are reconciled with GAAP net
income and GAAP diluted earnings per share in the table below:
Three Months Ended
Twelve Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
GAAP net income
$
68,797
$
109,812
$
404,592
$
315,588
Amortization of acquired intangible
assets, net of tax (A)
17,401
8,435
57,246
33,694
Deferred revenue fair value adjustment,
net of tax (A)
786
-
4,067
-
Acquisition-related expenses (A)
-
-
5,362
-
Restructuring expenses, net of tax (A)
7,205
5,013
7,205
13,328
Litigation settlement expenses, net of tax
(A)
36,248
-
36,248
-
Fair value impairment of investment
(A)
5,000
-
5,000
-
U.S. tax reform
2,149
5,792
6,654
138,016
Foreign tax credit adjustment (A)
-
7,204
-
7,204
Non-GAAP net income (A)
$
137,586
$
136,256
$
526,374
$
507,830
Diluted shares outstanding
144,687
144,004
144,484
143,987
GAAP diluted earnings per share
$
0.48
$
0.76
$
2.80
$
2.19
Non-GAAP diluted earnings per share
(A)
$
0.95
$
0.95
$
3.64
$
3.53
(A)
ResMed adjusts for the impact of the
amortization of acquired intangibles, deferred revenue fair value
adjustment, acquisition-related expenses, restructuring-related
expenses, litigation settlement expenses, fair value impairment of
investment, and the impact of U.S. tax reform on income tax
expense, from their evaluation of ongoing operations, and believes
that investors benefit from adjusting these items to facilitate a
more meaningful evaluation of current operating performance.
ResMed believes that non-GAAP diluted
earnings per share is an additional measure of performance that
investors can use to compare operating results between reporting
periods. ResMed uses non-GAAP information internally in planning,
forecasting, and evaluating the results of operations in the
current period and in comparing it to past periods. ResMed believes
this information provides investors better insight when evaluating
ResMed’s performance from core operations and provides consistent
financial reporting. The use of non-GAAP measures is intended to
supplement, and not to replace, the presentation of net income and
other GAAP measures. Like all non-GAAP measures, non-GAAP earnings
are subject to inherent limitations because they do not include all
the expenses that must be included under GAAP.
RESMED INC. AND
SUBSIDIARIES
Revenue by Product and Region (Unaudited; $ in thousands,
except for per share amounts)
Three Months Ended
June 30, 2019
June 30, 2018
% Change
Constant Currency (A)
U.S., Canada and Latin America
Devices
$
202.9
$
189.9
7
%
Masks and other
182.6
156.8
16
Total Sleep and Respiratory Care
$
385.5
$
346.7
11
Software as a Service
85.2
40.4
111
Total
$
470.7
$
387.1
22
Combined Europe, Asia and other
markets
Devices
$
155.5
$
162.2
- 4
%
1
%
Masks and other
78.8
74.3
6
12
Total Sleep and Respiratory Care
$
234.3
$
236.5
- 1
4
Global revenue
Devices
$
358.4
$
352.1
2
%
4
%
Masks and other
261.4
231.1
13
15
Total Sleep and Respiratory Care
$
619.8
$
583.2
6
8
Software as a Service
85.2
40.4
111
111
Total
$
705.0
$
623.6
13
15
Twelve Months Ended
June 30, 2019
June 30, 2018
% Change
Constant Currency (A)
U.S., Canada and Latin America
Devices
$
743.1
$
689.6
8
%
Masks and other
677.4
600.5
13
Total Sleep and Respiratory Care
$
1,420.5
$
1,290.1
10
Software as a Service
275.8
157.0
76
Total
$
1,696.3
$
1,447.1
17
Combined Europe, Asia and other
markets
Devices
$
618.5
$
614.0
1
%
5
%
Masks and other
291.8
279.1
5
9
Total Sleep and Respiratory Care
$
910.3
$
893.1
2
6
Global revenue
Devices
$
1,361.6
$
1,303.6
4
%
6
%
Masks and other
969.2
879.6
10
12
Total Sleep and Respiratory Care
$
2,330.8
$
2,183.2
7
9
Software as a Service
275.8
157.0
76
76
Total
$
2,606.6
$
2,340.2
11
13
(A)
In order to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency
fluctuations, we provide certain financial information on a
“constant currency basis”, which is in addition to the actual
financial information presented. In order to calculate our constant
currency information, we translate the current period financial
information using the foreign currency exchange rates that were in
effect during the previous comparable period. However, constant
currency measures should not be considered in isolation or as an
alternative to U.S. dollar measures that reflect current period
exchange rates, or to other financial measures calculated and
presented in accordance with U.S. GAAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005777/en/
For investors Amy Wakeham +1 858-836-5000
investorrelations@resmed.com
For media Jayme Rubenstein +1 858-836-6798
news@resmed.com
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