Full Press Release Details
ResMed Inc. Announces Results for the First Quarter of Fiscal Year 2019
~ Strong year-over-year growth in revenue, net income, and earnings per share ~
~ Growth balanced across the entire product portfolio ~
Note: A webcast of ResMed s conference call will be available at 4:30 p.m. EDT today at http://investor.resmed.com
SAN DIEGO, October 25, 2018 ResMed Inc. (NYSE: RMD, ASX: RMD), a world-leading connected health company, today announced
results for its quarter ended September 30, 2018.
First Quarter 2019 Highlights
Our first quarter 2019 results demonstrate continued strong performance across our business with 13 percent top-line revenue growth, driven by growth across our entire portfolio of offerings, said Mick Farrell, ResMed s chief executive officer. We also delivered another quarter of
improving operating leverage resulting in double-digit growth at the bottom line.
Farrell continued, During the quarter we expanded our
product portfolio with new masks and made ongoing upgrades to our digital health solutions, separating ResMed from the competition. We provide customers with services and solutions to help improve patient outcomes,
create efficiencies, and reduce overall healthcare system costs.
Financial Results and Operating Metrics
Unaudited; $ in millions, except for per share amounts
| Three Months Ended | ||||||||||||||||
| September 30, 2018 | September 30, 2017 | % Change | Constant Currency (A) | |||||||||||||
| Revenue | $ | 588.3 | $ | 523.7 | 12 | % | 13 | % | ||||||||
| Gross margin | 58.3 | % | 58.4 | % | ||||||||||||
| Selling, general and administrative expenses | 147.3 | 143.8 | 2 | 4 | ||||||||||||
| Research and development expenses | 38.8 | 37.4 | 4 | 8 | ||||||||||||
| Income from operations | 144.1 | 112.6 | 28 | |||||||||||||
| Net income | 105.7 | 86.1 | 23 | |||||||||||||
| Non-GAAP net income | 116.3 | 94.1 | 23 | |||||||||||||
| Diluted earnings per share | $ | 0.73 | $ | 0.60 | 22 | |||||||||||
| Non-GAAP diluted earnings per share | $ | 0.81 | $ | 0.66 | 23 |
Discussion of First Quarter Results
Other Business and Operational Highlights
Share repurchase program
During the quarter, we
repurchased 200,000 shares at a cost of $22.8 million, as part of our ongoing capital management program.
The ResMed board of directors today declared a quarterly cash dividend of $0.37 per share. The dividend will have a record date of November 8, 2018,
payable on December 13, 2018. 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 November 7,
2018 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 November 7,
2018 through November 8, 2018, inclusive.
ResMed will discuss its first 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 Q1 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 800-585-8367 (U.S.) or +1 416-621-4642 (outside U.S.), and entering the passcode 6686709. The
telephone replay will be available until November 8, 2018.
ResMed (NYSE: RMD, ASX: RMD), a world-leading connected health company with more than 6 million cloud-connected devices for daily remote patient
monitoring, changes lives with every breath. Its award-winning devices and software solutions help treat and manage sleep apnea, chronic obstructive pulmonary disease and other respiratory conditions. Its
6,000-member team strives to improve patients quality of life, reduce the impact of chronic disease and save healthcare costs in more than 120 countries.
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 | ||||||||
| September 30, 2018 | September 30, 2017 | |||||||
| Net revenue | $ | 588,279 | $ | 523,659 | ||||
| Cost of sales | 245,186 | 218,054 | ||||||
| Gross profit | $ | 343,093 | $ | 305,605 | ||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 147,303 | 143,849 | ||||||
| Research and development | 38,791 | 37,415 | ||||||
| Amortization of acquired intangible assets (1) | 12,867 | 11,783 | ||||||
| Total operating expenses | $ | 198,961 | $ | 193,047 | ||||
| Income from operations (1) | 144,132 | 112,558 | ||||||
| Other income (expenses), net: | ||||||||
| Interest income (expense), net | $ | (2,786 | ) | $ | (2,915 | ) | ||
| Other, net | (2,465 | ) | (1,158 | ) | ||||
| Total other income (expenses), net | (5,251 | ) | (4,073 | ) | ||||
| Income before income taxes | $ | 138,881 | $ | 108,485 | ||||
| Income taxes | 33,144 | 22,360 | ||||||
| Net income (1) | $ | 105,737 | $ | 86,125 | ||||
| Basic earnings per share | $ | 0.74 | $ | 0.61 | ||||
| Diluted earnings per share | $ | 0.73 | $ | 0.60 | ||||
| Non-GAAP diluted earnings per share (1) | $ | 0.81 | $ | 0.66 | ||||
| Basic shares outstanding | 142,668 | 142,247 | ||||||
| Diluted shares outstanding | 144,030 | 143,480 |
RESMED INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited; $ in thousands)
| September 30, 2018 | June 30, 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 230,188 | $ | 188,701 | ||||
| Accounts receivable, net | 463,743 | 483,681 | ||||||
| Inventories | 282,555 | 268,701 | ||||||
| Prepayments and other current assets | 111,757 | 124,634 | ||||||
| Total current assets | $ | 1,088,243 | $ | 1,065,717 | ||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | $ | 381,822 | $ | 386,550 | ||||
| Goodwill | 1,192,030 | 1,068,944 | ||||||
| Other intangibles, net | 242,193 | 215,184 | ||||||
| Deferred income taxes and other non-current assets | 163,250 | 327,528 | ||||||
| Total non-current assets | $ | 1,979,295 | $ | 1,998,206 | ||||
| Total assets | $ | 3,067,538 | $ | 3,063,923 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 98,709 | $ | 92,723 | ||||
| Accrued expenses | 169,465 | 185,805 | ||||||
| Deferred revenue | 64,822 | 60,828 | ||||||
| Income taxes payable | 76,137 | 160,427 | ||||||
| Short-term debt | 11,975 | 11,466 | ||||||
| Total current liabilities | $ | 421,108 | $ | 511,249 | ||||
| Non-current liabilities: | ||||||||
| Deferred revenue | $ | 73,810 | $ | 71,596 | ||||
| Deferred income taxes | 16,091 | 13,084 | ||||||
| Other long term liabilities | 534 | 924 | ||||||
| Long-term debt | 517,637 | 269,988 | ||||||
| Long-term income taxes payable | 138,102 | 138,102 | ||||||
| Total non-current liabilities | $ | 746,174 | $ | 493,694 | ||||
| Total liabilities | $ | 1,167,282 | $ | 1,004,943 | ||||
| STOCKHOLDERS EQUITY: | ||||||||
| Common stock | $ | 570 | $ | 571 | ||||
| Additional paid-in capital | 1,463,669 | 1,450,821 | ||||||
| Retained earnings | 2,296,473 | 2,432,328 | ||||||
| Treasury stock | (1,623,256 | ) | (1,600,412 | ) | ||||
| Accumulated other comprehensive income | (237,200 | ) | (224,328 | ) | ||||
| Total stockholders equity | $ | 1,900,256 | $ | 2,058,980 | ||||
| Total liabilities and stockholders equity | $ | 3,067,538 | $ | 3,063,923 |
RESMED INC AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited; $ in thousands)
| Three Months Ended | ||||||||
| September 30, 2018 | September 30, 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 105,737 | $ | 86,125 | ||||
| Adjustment to reconcile net income to cash provided by operating activities: | ||||||||
| Depreciation and amortization | 30,424 | 29,571 | ||||||
| Stock-based compensation costs | 12,477 | 11,948 | ||||||
| Impairment of equity investments | 1,711 | 962 | ||||||
| Changes in fair value of business combination contingent consideration | (183 | ) | ||||||
| Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
| Accounts receivable, net | 20,342 | 23,317 | ||||||
| Inventories, net | (15,661 | ) | (26,942 | ) | ||||
| Prepaid expenses, net deferred income taxes and other current assets | (7,703 | ) | (15,408 | ) | ||||
| Accounts payable, accrued expenses and other | (99,025 | ) | (15,590 | ) | ||||
| Net cash provided by operating activities | $ | 48,119 | $ | 93,983 | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment | (12,994 | ) | (16,030 | ) | ||||
| Patent registration costs | (2,611 | ) | (2,242 | ) | ||||
| Business acquisitions, net of cash acquired | (126,439 | ) | ||||||
| Investments in equity investments | (2,467 | ) | (3,225 | ) | ||||
| Proceeds / (Payments) on maturity of foreign currency contracts | (3,678 | ) | 6,073 | |||||
| Net cash used in investing activities | $ | (148,189 | ) | $ | (15,424 | ) | ||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock, net | 389 | 3,615 | ||||||
| Purchases of treasury stock | (19,399 | ) | ||||||
| Payment of business combination contingent consideration | (240 | ) | ||||||
| Proceeds from borrowings, net of borrowing costs | 303,000 | 50,000 | ||||||
| Repayment of borrowings | (86,133 | ) | (110,000 | ) | ||||
| Dividends paid | (52,793 | ) | (49,698 | ) | ||||
| Net cash (used in) / provided by financing activities | $ | 144,824 | $ | (106,083 | ) | |||
| Effect of exchange rate changes on cash | $ | (3,267 | ) | $ | 16,691 | |||
| Net increase / (decrease) in cash and cash equivalents | 41,487 | (10,833 | ) | |||||
| Cash and cash equivalents at beginning of period | 188,701 | 821,935 | ||||||
| Cash and cash equivalents at end of period | $ | 230,188 | $ | 811,102 |
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 | ||||||||
| September 30, 2018 | September 30, 2017 | |||||||
| GAAP income from operations | $ | 144,132 | $ | 112,558 | ||||
| Amortization of acquired intangible assets (A) | 12,867 | 11,783 | ||||||
| Non-GAAP income from operations | $ | 156,999 | $ | 124,341 |
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 | ||||||||
| September 30, 2018 | September 30, 2017 | |||||||
| GAAP net income | $ | 105,737 | $ | 86,125 | ||||
| Amortization of acquired intangible assets, net of tax (A) | 9,987 | 8,013 | ||||||
| U.S. tax reform transition impact (A) | 534 | |||||||
| Non-GAAP net income (A) | $ | 116,258 | $ | 94,138 | ||||
| Diluted shares outstanding | 144,030 | 143,480 | ||||||
| GAAP diluted earnings per share | $ | 0.73 | $ | 0.60 | ||||
| Non-GAAP diluted earnings per share (A) | $ | 0.81 | $ | 0.66 |
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 in 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 | ||||||||||||||||
| September 30, 2018 | September 30, 2017 | % Change | Constant Currency (A) | |||||||||||||
| U.S., Canada and Latin America | ||||||||||||||||
| Devices | $ | 172.4 | $ | 157.9 | 9 | % | ||||||||||
| Masks | 154.0 | 138.7 | 11 | |||||||||||||
| Total devices and masks | $ | 326.4 | $ | 296.6 | 10 | |||||||||||
| Software as a Service | 47.5 | 38.1 | 25 | |||||||||||||
| Total | $ | 373.9 | $ | 334.7 | 12 | |||||||||||
| Combined Europe, Asia and other markets | ||||||||||||||||
| Devices | $ | 151.7 | $ | 128.3 | 18 | % | 20 | % | ||||||||
| Masks | 62.7 | 60.7 | 3 | 6 | ||||||||||||
| Total | $ | 214.4 | $ | 189.0 | 13 | 16 | ||||||||||
| Global revenue | ||||||||||||||||
| Devices | $ | 324.1 | $ | 286.2 | 13 | % | 14 | % | ||||||||
| Masks | 216.7 | 199.4 | 9 | 10 | ||||||||||||
| Total devices and masks | $ | 540.8 | $ | 485.6 | 11 | 12 | ||||||||||
| Software as a Service | 47.5 | 38.1 | 25 | 25 | ||||||||||||
| Total | $ | 588.3 | $ | 523.7 | 12 | 13 |