Full Press Release Details
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| Amy Wakeham | Jayme Rubenstein | |
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| investorrelations@resmed.com | news@resmed.com |
ResMed Inc. Announces Results for the First Quarter of Fiscal Year 2020
Note: A webcast of ResMed s conference call will be available at 4:30 p.m. ET today at http://investor.resmed.com
SAN DIEGO, October 24, 2019 ResMed Inc. (NYSE: RMD, ASX: RMD), a world-leading connected health company, today announced results for its quarter
ended September 30, 2019.
First Quarter 2020 Highlights
Our global ResMed team delivered another quarter of strong performance in the first quarter of fiscal year 2020
with double-digit topline revenue growth, balanced growth across our businesses and regions, and further improvements in operating leverage resulting in double-digit growth at the bottom line, said Mick Farrell, ResMed s CEO. We
were particularly pleased that strong customer demand for our new products drove high-teens growth in the mask category during the quarter. Through organic growth and targeted acquisitions, we re driving forward every facet of our business,
leading the innovation of devices and software that improve health outcomes, create efficiencies, and reduce overall healthcare system costs. We re well on our way to improving 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 | ||||||||||||||||
| September 30, 2019 | September 30, 2018 | % Change | Constant Currency (A) | |||||||||||||
| Revenue | $ | 681.1 | $ | 588.3 | 16 | % | 17 | % | ||||||||
| Gross margin | 59.5 | % | 58.3 | % | 2 | |||||||||||
| Selling, general and administrative expenses | 167.4 | 147.3 | 14 | 16 | ||||||||||||
| Research and development expenses | 48.0 | 38.8 | 24 | 27 | ||||||||||||
| Income from operations | 171.1 | 144.1 | 19 | |||||||||||||
| Non-GAAP income from operations (B) | 191.0 | 157.0 | 22 | |||||||||||||
| Net income | 120.1 | 105.7 | 14 | |||||||||||||
| Non-GAAP net income (B) | 135.4 | 116.3 | 16 | |||||||||||||
| Diluted earnings per share | $ | 0.83 | $ | 0.73 | 14 | |||||||||||
| Non-GAAP diluted earnings per share (B) | $ | 0.93 | $ | 0.81 | 15 |
Discussion of First Quarter Results
Other Business and Operational Highlights
The ResMed board of directors today declared a quarterly cash dividend of $0.39 per share. The dividend will have a record date of
November 7, 2019, payable on December 12, 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 November 6, 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 November 6, 2019, through November 7, 2019, inclusive.
ResMed will discuss its first quarter fiscal year 2020 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 2020 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 1076268. The
telephone replay will be available until November 7, 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 | ||||||||
| September 30, 2019 | September 30, 2018 | |||||||
| Net revenue | $ | 681,056 | $ | 588,279 | ||||
| Cost of sales | 276,001 | 245,186 | ||||||
| Gross profit | $ | 405,055 | $ | 343,093 | ||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 167,440 | 147,303 | ||||||
| Research and development | 48,033 | 38,791 | ||||||
| Amortization of acquired intangible assets (1) | 18,480 | 12,867 | ||||||
| Total operating expenses | $ | 233,953 | $ | 198,961 | ||||
| Income from operations (1) | 171,102 | 144,132 | ||||||
| Other income (expenses), net: | ||||||||
| Interest income (expense), net | $ | (10,543 | ) | $ | (2,786 | ) | ||
| Loss attributable to equity method investments | (6,863 | ) | ||||||
| Other, net | (3,109 | ) | (2,465 | ) | ||||
| Total other income (expenses), net | (20,515 | ) | (5,251 | ) | ||||
| Income before income taxes | $ | 150,587 | $ | 138,881 | ||||
| Income taxes | 30,439 | 33,144 | ||||||
| Net income | $ | 120,148 | $ | 105,737 | ||||
| Basic earnings per share | $ | 0.84 | $ | 0.74 | ||||
| Diluted earnings per share | $ | 0.83 | $ | 0.73 | ||||
| Non-GAAP diluted earnings per share (1) | $ | 0.93 | $ | 0.81 | ||||
| Basic shares outstanding | 143,719 | 142,668 | ||||||
| Diluted shares outstanding | 145,099 | 144,030 |
RESMED INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
| September 30, 2019 | June 30, 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 172,154 | $ | 147,128 | ||||
| Accounts receivable, net | 493,836 | 528,484 | ||||||
| Inventories | 357,033 | 349,641 | ||||||
| Prepayments and other current assets | 138,075 | 120,113 | ||||||
| Total current assets | $ | 1,161,098 | $ | 1,145,366 | ||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | $ | 382,970 | $ | 387,460 | ||||
| Operating lease right-of-use assets | 81,650 | |||||||
| Goodwill and other intangibles, net | 2,353,274 | 2,378,399 | ||||||
| Deferred income taxes and other non-current assets | 175,566 | 196,457 | ||||||
| Total non-current assets | $ | 2,993,460 | $ | 2,962,316 | ||||
| Total assets | $ | 4,154,558 | $ | 4,107,682 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 109,742 | $ | 115,725 | ||||
| Accrued expenses | 231,253 | 266,359 | ||||||
| Operating lease liabilities, current | 19,548 | |||||||
| Deferred revenue | 86,954 | 88,667 | ||||||
| Income taxes payable | 90,968 | 73,248 | ||||||
| Short-term debt | 11,992 | 11,992 | ||||||
| Total current liabilities | $ | 550,457 | $ | 555,991 | ||||
| Non-current liabilities: | ||||||||
| Deferred revenue | $ | 82,668 | $ | 81,143 | ||||
| Deferred income taxes | 15,177 | 11,380 | ||||||
| Operating lease liabilities, non current | 65,838 | |||||||
| Other long term liabilities | 2,047 | 2,058 | ||||||
| Long-term debt | 1,208,210 | 1,258,861 | ||||||
| Long-term income taxes payable | 112,910 | 126,056 | ||||||
| Total non-current liabilities | $ | 1,486,850 | $ | 1,479,498 | ||||
| Total liabilities | $ | 2,037,307 | $ | 2,035,489 | ||||
| STOCKHOLDERS EQUITY: | ||||||||
| Common stock | $ | 575 | $ | 575 | ||||
| Additional paid-in capital | 1,530,011 | 1,511,473 | ||||||
| Retained earnings | 2,500,506 | 2,436,410 | ||||||
| Treasury stock | (1,623,256 | ) | (1,623,256 | ) | ||||
| Accumulated other comprehensive income | (290,585 | ) | (253,009 | ) | ||||
| Total stockholders equity | $ | 2,117,251 | $ | 2,072,193 | ||||
| Total liabilities and stockholders equity | $ | 4,154,558 | $ | 4,107,682 |
RESMED INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited; $ in thousands)
| Three Months Ended | ||||||||
| September 30, 2019 | September 30, 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 120,148 | $ | 105,737 | ||||
| Adjustment to reconcile net income to cash provided by operating activities: | ||||||||
| Depreciation and amortization | 37,954 | 30,424 | ||||||
| Amortization of right-of-use-assets | 5,963 | |||||||
| Stock-based compensation costs | 13,256 | 12,477 | ||||||
| Loss attributable to equity method investments | 6,863 | |||||||
| Impairment of equity investments | 2,590 | 1,711 | ||||||
| Changes in fair value of business combination contingent consideration | (8 | ) | (183 | ) | ||||
| Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
| Accounts receivable, net | 28,286 | 20,342 | ||||||
| Inventories, net | (14,204 | ) | (15,661 | ) | ||||
| Prepaid expenses, net deferred income taxes and other current assets | (8,407 | ) | (7,703 | ) | ||||
| Accounts payable, accrued expenses and other | (30,078 | ) | (99,025 | ) | ||||
| Net cash provided by operating activities | $ | 162,363 | $ | 48,119 | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment | (22,671 | ) | (12,994 | ) | ||||
| Patent registration costs | (2,069 | ) | (2,611 | ) | ||||
| Business acquisitions, net of cash acquired | (126,439 | ) | ||||||
| Purchases of investments | (2,741 | ) | (2,467 | ) | ||||
| Proceeds / (Payments) on maturity of foreign currency contracts | (5,743 | ) | (3,678 | ) | ||||
| Net cash used in investing activities | $ | (33,224 | ) | $ | (148,189 | ) | ||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock, net | 5,609 | 513 | ||||||
| Taxes paid related to net share settlement of equity awards | (326 | ) | (124 | ) | ||||
| Purchases of treasury stock | (19,399 | ) | ||||||
| Payment of business combination contingent consideration | (302 | ) | (240 | ) | ||||
| Proceeds from borrowings, net of borrowing costs | 565,000 | 303,000 | ||||||
| Repayment of borrowings | (614,003 | ) | (86,133 | ) | ||||
| Dividends paid | (56,052 | ) | (52,793 | ) | ||||
| Net cash (used in) / provided by financing activities | $ | (100,074 | ) | $ | 144,824 | |||
| Effect of exchange rate changes on cash | $ | (4,039 | ) | $ | (3,267 | ) | ||
| Net increase / (decrease) in cash and cash equivalents | 25,026 | 41,487 | ||||||
| Cash and cash equivalents at beginning of period | 147,128 | 188,701 | ||||||
| Cash and cash equivalents at end of period | $ | 172,154 | $ | 230,188 |
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, 2019 | September 30, 2018 | |||||||
| GAAP income from operations | $ | 171,102 | $ | 144,132 | ||||
| Amortization of acquired intangible assets (A) | 18,480 | 12,867 | ||||||
| Deferred revenue fair value adjustment (A) | 1,445 | |||||||
| Non-GAAP income from operations | $ | 191,027 | $ | 156,999 |
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, 2019 | September 30, 2018 | |||||||
| GAAP net income | $ | 120,148 | $ | 105,737 | ||||
| Amortization of acquired intangible assets, net of tax (A) | 14,122 | 9,987 | ||||||
| Deferred revenue fair value adjustment, net of tax (A) | 1,107 | |||||||
| U.S. tax reform | 534 | |||||||
| Non-GAAP net income (A) | $ | 135,377 | $ | 116,258 | ||||
| Diluted shares outstanding | 145,099 | 144,030 | ||||||
| GAAP diluted earnings per share | $ | 0.83 | $ | 0.73 | ||||
| Non-GAAP diluted earnings per share (A) | $ | 0.93 | $ | 0.81 |
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
thousands, except for per share amounts)
| Three Months Ended | ||||||||||||||||
| September 30, 2019 | September 30, 2018 | % Change | Constant Currency (A) | |||||||||||||
| U.S., Canada and Latin America | ||||||||||||||||
| Devices | $ | 186.9 | $ | 172.4 | 8 | % | ||||||||||
| Masks and other | 183.4 | 154.0 | 19 | |||||||||||||
| Total Sleep and Respiratory Care | $ | 370.3 | $ | 326.4 | 13 | |||||||||||
| Software as a Service | 86.9 | 47.5 | 83 | |||||||||||||
| Total | $ | 457.2 | $ | 373.9 | 22 | |||||||||||
| Combined Europe, Asia and other markets | ||||||||||||||||
| Devices | $ | 151.9 | $ | 151.7 | 0 | % | 4 | % | ||||||||
| Masks and other | 72.0 | 62.7 | 15 | 19 | ||||||||||||
| Total Sleep and Respiratory Care | $ | 223.9 | $ | 214.4 | 4 | 8 | ||||||||||
| Global revenue | ||||||||||||||||
| Devices | $ | 338.8 | $ | 324.1 | 5 | % | 6 | % | ||||||||
| Masks and other | 255.4 | 216.7 | 18 | 19 | ||||||||||||
| Total Sleep and Respiratory Care | $ | 594.2 | $ | 540.8 | 10 | 11 | ||||||||||
| Software as a Service | 86.9 | 47.5 | 83 | 83 | ||||||||||||
| Total | $ | 681.1 | $ | 588.3 | 16 | 17 |