RESMED, INC. SAN DIEGO, Jan. 21, 2016 /PRNewswire/ -- ResMed Inc. (NYSE: RMD) today announced results for its quarter ended December 31, 2015. Revenue for the quarter was $454.5 million, a 7 percent increase compared with the quarter ended December 31, 2014; this is a 13 percent increase on a constant currency basis.
"We remain focused on delivering strong long-term growth from our sleep-disordered breathing and respiratory care businesses. Our team continued to deliver double-digit constant currency growth this quarter," said Mick Farrell, ResMed's chief executive officer. "Our Americas region was a significant contributor this quarter, as our customers continued to show their strong preference for our offerings, including Air Solutions cloud-based software, AirSense devices, and AirFit patient interface systems.
"We have expanded our respiratory care business into the field of long-term oxygen therapy. Last week we announced a definitive agreement to acquire Inova Labs in Austin, Texas. This will add portable oxygen concentrators, complementing our non-invasive ventilators, and providing yet another ResMed therapy option for patients with chronic obstructive pulmonary disease, or COPD."
Farrell continued, "In the 15 months since we launched our Air Solutions platform, ResMed has transformed into a tech-driven medical device company. As the global leader of connected care for medical devices, we are liberating healthcare data, improving outcomes, and unlocking value by providing actionable information for patients, physicians, providers and payors, literally every morning."
Analysis of second quarter results
In the second quarter of fiscal year 2016, revenue in the Americas was $269.5 million, a 17 percent increase over the prior year's quarter. Revenue in combined EMEA and APAC was $185.0 million, a 4 percent decrease compared with the quarter ended December 31, 2014; this is a 7 percent increase on a constant currency basis.
Gross margin in the second quarter was 58.6 percent, but this included a one-time benefit relating to the release of $2.4 million in accrued expenses associated with the SERVE-HF field safety notice. Excluding this benefit, gross margin for Q2 FY16 was 58.1 percent; this is lower than the prior year's quarter, mainly due to declines in average selling prices and an unfavorable geographic and product mix.
Income from operations for the quarter was $108.0 million, a 1 percent decrease compared with the quarter ended December 31, 2014. Non-GAAP income from operations for the quarter was $116.9 million, a 5 percent increase compared with the quarter ended December 31, 2014.
Selling, general and administrative expenses were $118.2 million for the second quarter of fiscal year 2016, a 4 percent decrease over the quarter ended December 31, 2014; this is a 4 percent increase on a constant currency basis. SG&A expenses improved to 26.0 percent of revenue in the quarter, compared with 29.0 percent in the quarter ended December 31, 2014.
Research and development expenses were $29.0 million for the second quarter of fiscal year 2016, or 6.4 percent of revenue. R&D expenses decreased by 1 percent compared with the quarter ended December 31, 2014; this is a 14 percent increase on a constant currency basis.
Amortization of acquired intangible assets was $4.4 million during the quarter. Stock-based compensation costs incurred during the quarter of $11.5 million consisted of expenses associated with employee equity grants, and the company's employee stock purchase plan.
Net income for the quarter was $90.5 million, a 1 percent decrease compared with the quarter ended December 31, 2014. Non-GAAP net income for the quarter ended December 31, 2015 was $97.5 million, a 5 percent increase compared with the quarter ended December 31, 2014 (non-GAAP measures exclude the SERVE-HF accrual release, amortization of acquired intangibles, and $5.2 million in net restructuring expenses associated with rationalizing our European facilities).
GAAP diluted earnings per share for the quarter were $0.64.
Non-GAAP diluted earnings per share for the quarter were $0.69.
Cash flow from operations for the quarter was $147.4 million.
Share repurchase program
During the quarter, the company repurchased 700,000 shares at a cost of $40.1 million, as part of its ongoing capital management program.
Dividend program
The ResMed board of directors today declared a quarterly dividend of $0.30 per share. The dividend will have a record date of February 11, 2016, payable on March 17, 2016. 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 February 9, 2016 for common stock holders 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 February 10, 2016 through February 11, 2016 inclusive.
Webcast details
ResMed will discuss its financial and business results and outlook on its webcast at 1:30 p.m. U.S. Pacific Standard Time today. The live webcast of the call can be accessed on ResMed's Investor Relations website at investors.resmed.com. Please go to this section of the website and click on the icon for the "Q2 2016 earnings webcast" to register and listen to the live webcast. The online archive of the broadcast will be available on ResMed's website after the live call. In addition, a telephone replay of the conference call will be available approximately two hours after the call by dialing 855-859-2056 (U.S.) and +1 404-537-3406 (international) and entering a passcode of 4360562. The telephone replay will be available until February 4, 2016.
About ResMed
The global team at ResMed (NYSE:RMD) is united in the commitment to change millions of lives with every breath. With more than 4,000 employees and a presence in over 100 countries, the company has been pioneering new and innovative devices and treatments for sleep-disordered breathing, chronic obstructive pulmonary disease, and other chronic diseases for more than 25 years. ResMed's world-leading products and innovative solutions improve the quality of life for millions of patients worldwide, reduce the impact of chronic disease, and save healthcare costs. For more information about ResMed and its businesses, visit www.resmed.com or follow @resmed on Twitter.
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 and new markets for its products and the integration of acquisitions--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.
Investors:
Agnes Lee
Senior Director, Investor Relations
(858) 836-5971
investorrelations@resmed.com
News Media:
Alison Graves
Director, Global Corporate Communications
(858) 836-6789
news@resmed.com
ResMed Inc and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
2015 2014 2015 2014
---- ---- ---- ----
Net revenue $454,540 $422,952 $866,187 $803,351
Cost of sales 190,433 159,730 363,461 302,816
SERVE-HF
accrual
release(1) (2,402) - (2,402) -
Gross profit 266,509 263,222 505,128 500,535
------------ ------- ------- ------- -------
Operating expenses:
Selling, general
and
administrative 118,219 122,520 229,314 233,041
Research and
development 28,970 29,294 56,162 59,318
Restructuring
expenses(1) 6,914 - 6,914 -
Amortization of
acquired
intangible
assets(1) 4,429 2,262 6,736 4,355
Total operating
expenses 158,532 154,076 299,126 296,714
--------------- ------- ------- ------- -------
Income from
operations(1) 107,977 109,146 206,002 203,821
-------------- ------- ------- ------- -------
Other income (expenses), net:
Interest income
(expense), net 2,476 5,418 5,898 11,003
Other, net 3,242 947 1,239 2,617
Total other
income
(expenses), net 5,718 6,365 7,137 13,620
---------------- ----- ----- ----- ------
Income before
income taxes 113,695 115,511 213,139 217,441
Income taxes 23,178 24,330 42,220 43,001
Net income(1) $90,517 $91,181 $170,919 $174,440
------------ ------- ------- -------- --------
Basic earnings
per share $0.65 $0.65 $1.22 $1.25
Diluted earnings
per share $0.64 $0.64 $1.21 $1.22
Non-GAAP
diluted
earnings per
share(1) $0.69 $0.65 $1.27 $1.25
Basic shares
outstanding 139,926 140,048 140,118 140,104
Diluted shares
outstanding 141,148 142,202 141,532 142,468
-------------- ------- ------- ------- -------
(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)
December 31 June 30,
2015 2015
---- ----
Assets
Current assets:
Cash and cash
equivalents $658,804 $717,249
Accounts receivable, net 331,747 362,568
Inventories 237,463 246,859
Prepayments, deferred
income taxes and other
current assets 122,827 117,506
Total current assets 1,350,841 1,444,182
-------------------- --------- ---------
Property, plant and
equipment, net 375,224 387,758
Goodwill and other
intangible assets, net 466,418 311,403
Deferred income taxes
and other non-current
assets 46,528 40,917
Total non-current assets 888,170 740,078
------------------------ ------- -------
Total assets $2,239,011 $2,184,260
------------ ---------- ----------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $67,580 $81,112
Accrued expenses 147,662 132,976
Deferred revenue 36,101 36,097
Income taxes payable 12,427 16,278
Deferred income taxes 815 796
Short-term debt 985 -
Total current
liabilities 265,570 267,259
------------- ------- -------
Non-current liabilities:
Deferred income taxes 15,665 8,062
Deferred revenue 28,928 19,284
Income taxes payable 1,754 1,754
Other long term
liabilities 2,232 -
Long-term debt 400,591 300,594
Total non-current
liabilities 449,170 329,694
----------------- ------- -------
Total liabilities 714,740 596,953
----------------- ------- -------
Stockholders' Equity:
Common stock 560 562
Additional paid-in
capital 1,268,374 1,228,795
Retained earnings 2,062,885 1,976,020
Treasury stock (1,546,611) (1,444,554)
Accumulated other
comprehensive income (260,937) (173,516)
--------------------- -------- --------
Total stockholders'
equity $1,524,271 $1,587,307
------------------- ---------- ----------
Total liabilities and
stockholders' equity $2,239,011 $2,184,260
ResMed Inc And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited - In thousands)
Six Months Ended
December 31,
2015 2014
---- ----
Cash flows from operating activities:
Net income $170,919 $174,440
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 39,920 37,451
Impairment of long-lived asset 2,815 -
Changes in fair value of business
combination contingent
consideration (105) (132)
Gain on disposal of business - (709)
Stock-based compensation costs 23,841 23,084
Excess tax benefit from stock-
based compensation arrangements (10,710) (10,889)
Impairment of cost method
investment 750 -
Changes in operating assets and liabilities, net of effect of
acquisitions:
Accounts receivable, net 24,533 11,067
Inventories, net 8,751 (64,406)
Prepaid expenses, net deferred
income taxes and other current
assets 14,398 (4,309)
Accounts payable, accrued expenses
and other liabilities (5,600) 26,941
Net cash provided by operating
activities 269,512 192,538
------------------------------ ------- -------
Cash flows from investing activities:
Purchases of property, plant and
equipment (30,934) (39,675)
Patent registration costs (4,902) (4,810)
Business acquisitions, net of cash
acquired (152,118) (17,781)
Investments in cost-method
investments (7,582) (10,500)
Proceeds from sale of business - 468
Payments on maturity of foreign
currency contracts (28,326) (28,300)
Net cash used in investing
activities (223,862) (100,598)
-------------------------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of common
stock, net 8,066 9,931
Excess tax benefit from stock-
based compensation arrangements 10,710 10,889
Purchases of treasury stock (102,058) (84,055)
Payment of business combination
contingent consideration (1,120) (458)
Proceeds from borrowings, net of
borrowing costs 200,000 149,000
Repayment of borrowings (100,160) (19)
Dividends paid (84,054) (78,477)
-------------- ------- -------
Net cash (used in) /provided by
financing activities (68,616) 6,811
------------------------------- ------- -----
Effect of exchange rate changes on
cash (35,479) (123,786)
---------------------------------- ------- --------
Net increase /(decrease) in cash
and cash equivalents (58,445) (25,035)
Cash and cash equivalents at
beginning of period 717,249 905,730
Cash and cash equivalents at end of
period 658,804 880,695
----------------------------------- ------- -------
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(In US$ thousands, except share and per share data)
The measure, "non-GAAP income from operations" is reconciled with GAAP income from operations below:
Three Months Ended Six Months Ended
December 31, December 31,
2015 2014 2015 2014
---- ---- ---- ----
GAAP income from
operations $107,977 $109,146 $206,002 $203,821
SERVE-HF accrual
release (A) (2,402) - (2,402) -
Restructuring
expenses (A) 6,914 - 6,914 -
Amortization of
acquired
intangible assets
(A) 4,429 2,262 6,736 4,355
Non-GAAP income
from operations
(excluding the
impact of SERVE-
HF accrual
release,
restructuring
expenses and
amortization of
acquired
intangible assets) $116,918 $111,408 $217,250 $208,176
------------------- -------- -------- -------- --------
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 Six Months Ended
December 31, December 31,
2015 2014 2015 2014
---- ---- ---- ----
GAAP net income $90,517 $91,181 $170,919 $174,440
SERVE-HF accrual
release, net of
tax (A) (1,682) - (1,682) -
Restructuring
expenses, net of
tax (A) 5,204 - 5,204 -
Amortization of
acquired
intangible assets,
net of tax (A) 3,439 1,707 5,156 3,308
Non-GAAP net
income (A) $97,478 $92,888 $179,597 $177,748
Diluted shares
outstanding 141,148 142,202 141,532 142,468
GAAP diluted
earnings per share $0.64 $0.64 $1.21 $1.22
Non-GAAP diluted
earnings per share
(A) $0.69 $0.65 $1.27 $1.25
------------------- ----- ----- ----- -----
(A) ResMed excludes the impact of
release of SERVE-HF accrual,
restructuring expenses and
amortization of acquired
intangible assets from their
evaluation of ongoing operations
and believes investors benefit
from excluding these charges to
facilitate a more meaningful
evaluation of current operating
performance.
ResMed believes that diluted
earnings per share, which
exclude the impact of the SERVE-
HF accrual release,
restructuring expenses and
amortization of acquired
intangible assets, is an
additional measure of
performance 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. Our use of
non-GAAP measures is intended
to supplement, and not to
replace, our 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.
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