~ 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--(BUSINESS WIRE)--
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
-
Revenue increased 12% to $588.3 million; up 13% on a constant currency
basis
-
Net income increased by 23%; non-GAAP net income up 23%
-
GAAP diluted earnings per share of $0.73; non-GAAP diluted earnings
per share of $0.81
“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
|
|
|
|
|
(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.
|
Discussion of First Quarter Results
-
Revenue in U.S., Canada, and Latin America, excluding Software as a
Service, grew by 10 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 16 percent on a
constant currency basis compared to the same period of the prior year,
primarily driven by strong device sales. Software as a Service revenue
increased 25 percent, compared to the prior year period due to
continued growth in our Brightree service offerings and incremental
contribution from the acquisition of HEALTHCAREfirst, which
closed early in the first quarter.
-
Gross margin was slightly lower than the prior year quarter mainly due
to declines in average selling prices, which were partially offset by
manufacturing and procurement efficiencies.
-
Selling, general and administrative expenses increased by 2 percent
compared to the prior year period, or by 4 percent on a constant
currency basis, due to continued improvements in operating leverage.
SG&A expenses improved to 25.0 percent of revenue in the quarter,
compared with 27.5 percent in the same period of the prior year.
-
Income from operations increased by 28 percent and non-GAAP income
from operations increased by 26 percent compared to the prior year
period.
-
Net income increased by 23 percent and non-GAAP net income increased
by 23 percent compared to the prior year period. Non-GAAP measures
adjust for amortization of acquired intangibles and impact of U.S. tax
reform on income tax expense.
-
GAAP diluted earnings per share increased by 22 percent and non-GAAP
diluted earnings per share were 23 percent higher compared with the
same period of the prior year.
-
Cash flow from operations for the quarter was $48.1 million, compared
to net income in the current quarter of $105.7 million. Cash flow from
operations included tax payments of $125.0 million compared with $30.2
million in the same period of the prior year. During the quarter we
paid $52.8 million in dividends.
Other Business and Operational Highlights
-
Completed the acquisition of HEALTHCAREfirst, a provider of
software solutions and services for home health and hospice agencies,
for consideration of $126.3 million.
-
Announced a joint venture with Verily, combining ResMed’s expertise in
sleep apnea and Verily’s advanced health data analytics technologies,
to study the health and financial impacts of undiagnosed and untreated
sleep apnea, and to develop software solutions that enable healthcare
providers to more efficiently identify, diagnose, treat and manage
individuals with sleep apnea and other breathing-related sleep
disorders.
-
Introduced key upgrades to the Astral life support ventilator,
including AutoEPAP functionality along with customizable program names
and easily changeable interfaces.
-
Introduced AirFit F30, ResMed’s first minimal-contact full face CPAP
mask, expanding the mask product portfolio to meet the needs of a
select group of PAP users who need a full face mask but are looking
for the flexibility to wear glasses in bed or to reduce facial contact
with a full face mask.
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.
Dividend 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.
Webcast details
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.
About ResMed
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
|
|
(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)
|
|
|
|
|
|
|
|
|
|
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
|
(A)
|
|
ResMed adjusts for the impact of the amortization of acquired
intangibles and 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 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
|
|
(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/20181025005860/en/
ResMed Inc.
For investors
Amy Wakeham
858-836-5000
investorrelations@resmed.com
or
For
media
Jayme Rubenstein
858-836-6798
news@resmed.com
Source: ResMed Inc.