Full Press Release Details
| For investors | For media | |||
| Amy Wakeham | Jayme Rubenstein | |||
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| investorrelations@resmed.com | news@resmed.com |
ResMed Inc. Announces Results for the Fourth Quarter of Fiscal Year 2019
Note: A webcast of ResMed s conference call will be available at 4:30 p.m. ET today at
SAN DIEGO, July 25, 2019 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
Full Year 2019 Highlights
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 |
Discussion of Fourth Quarter Results
Other Business and Operational Highlights
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.
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.
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 |
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
| 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)
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 |
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 |