Bay Street News

ResMed Inc. Announces Results for the Fourth Quarter of Fiscal Year 2024

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, Aug. 01, 2024 (GLOBE NEWSWIRE) — ResMed Inc. (NYSE: RMD, ASX: RMD) today announced results for its quarter ended June 30, 2024.

Fourth Quarter 2024 Highlights
All comparisons are to the prior year period

Full Year 2024 Highlights
All comparisons are to the prior year period

“Our fourth quarter and full-year fiscal year 2024 results demonstrate strong performance across all sectors of our business,” said Mick Farrell, Chairman & CEO of ResMed. “Ongoing patient and customer demand for our best-in-class products and software solutions is incredibly strong, driving solid growth across our devices, masks, and software businesses. The global ResMed team’s focus on operating excellence, ongoing cost discipline, and profitable growth acceleration resulted in gross margin expansion, strong operating leverage, and double-digit growth in bottom-line profitability.

“Nearly 2.5 billion suffer from major sleep health and breathing disorders. As the market leader in these significantly underpenetrated markets, we’re well-positioned as the clear leader to drive increased market penetration, demand generation, and accelerate growth for our businesses. We’re laser-focused on increasing awareness with the fast-growth population of sleep-health-interested consumers, creating virtual pathways that expand access to therapies, while offering a broad portfolio of medical device products, software solutions, and beyond, as we deliver value for all ResMed stakeholders.”

Financial Results and Operating Metrics

Unaudited; $ in millions, except for per share amounts

  Three Months Ended
  June 30,
2024
  June 30,
2023
  % Change   Constant
Currency(A)
Revenue $ 1,223.2     $ 1,122.1     9 %   10 %
Gross margin   58.5 %     55.0 %   6      
Non-GAAP gross margin(B)   59.1 %     55.8 %   6      
Selling, general, and administrative expenses   242.2       240.7     1     1  
Research and development expenses   80.9       78.1     3     4  
Income from operations   381.2       275.3     38      
Non-GAAP income from operations(B)   400.5       307.0     30      
Net income   292.2       229.7     27      
Non-GAAP net income(B)   306.3       235.5     30      
Diluted earnings per share $ 1.98     $ 1.56     27      
Non-GAAP diluted earnings per share(B) $ 2.08     $ 1.60     30      
  Twelve Months Ended
  June 30,
2024
  June 30,
2023
  % Change   Constant
Currency(A)
Revenue $ 4,685.3     $ 4,223.0     11 %   11 %
Gross margin   56.7 %     55.8 %   2      
Non-GAAP gross margin(B)   57.7 %     56.5 %   2      
Selling, general, and administrative expenses   917.1       874.0     5     5  
Research and development expenses   307.5       287.6     7     8  
Income from operations   1,319.9       1,131.9     17      
Non-GAAP income from operations(B)   1,478.4       1,224.4     21      
Net income   1,021.0       897.6     14      
Non-GAAP net income(B)   1,139.3       949.8     20      
Diluted earnings per share $ 6.92     $ 6.09     14      
Non-GAAP diluted earnings per share(B) $ 7.72     $ 6.44     20      

(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.
(B) See the reconciliation of non-GAAP financial measures in the table at the end of the press release. 

Discussion of Fourth Quarter Results
All comparisons are to the prior year period unless otherwise noted

Other Business and Operational Highlights

Dividend program
The ResMed board of directors today declared a quarterly cash dividend of $0.53 per share. The dividend will have a record date of August 15, 2024, payable on September 19, 2024. 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 Interests (“CDIs”) 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, 2024, 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, 2024, through August 15, 2024, inclusive. 

Webcast details
ResMed will discuss its fourth quarter fiscal year 2024 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 2024 Earnings Webcast” to register and listen to the live webcast. A replay of the earnings webcast will be accessible on the website and available approximately two hours after the live webcast. In addition, a telephone replay of the conference call will be available approximately three hours after the webcast by dialing +1 877-660-6853 (U.S.) or +1 201-612-7415 (outside U.S.) and entering the passcode 13747201. The telephone replay will be available until August 15, 2024.

About ResMed
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 digital health technologies and 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 140 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, our supply chain, domestic and international regulatory developments, litigation, tax outlook, and the expected impact of macroeconomic conditions of our business – 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.

Condensed Consolidated Statements of Operations
(Unaudited; $ in thousands, except for per share amounts)

  Three Months Ended   Twelve Months Ended
  June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2023
               
Net revenue $ 1,223,195     $ 1,122,057     $ 4,685,297     $ 4,222,993  
               
Cost of sales   499,681       496,276       1,982,769       1,836,935  
Amortization of acquired intangibles(1)   7,987       8,395       32,963       30,396  
Masks with magnets field safety notification expenses(1)               6,351        
Astral field safety notification expenses(1)               7,911        
Total cost of sales $ 507,668     $ 504,671     $ 2,029,994     $ 1,867,331  
Gross profit $ 715,527     $ 617,386     $ 2,655,303     $ 2,355,662  
               
Selling, general, and administrative   242,187       240,687       917,136       874,003  
Research and development   80,861       78,144       307,525       287,642  
Amortization of acquired intangibles(1)   11,262       12,319       46,521       42,020  
Restructuring expenses(1)         9,177       64,228       9,177  
Acquisition related expenses(1)         1,792             10,949  
Total operating expenses $ 334,310     $ 342,119     $ 1,335,410     $ 1,223,791  
Income from operations $ 381,217     $ 275,267     $ 1,319,893     $ 1,131,871  
               
Other income (expenses), net:              
Interest expense, net $ (5,920 )   $ (14,943 )   $ (45,708 )   $ (47,379 )
Gain (loss) attributable to equity method investments   868       (2,228 )     (1,848 )     (7,265 )
Gain on equity investments(1)   (15,473 )     (1,583 )     (4,045 )     9,922  
Gain on insurance recoveries(1)         20,227             20,227  
Other, net   (2,960 )     61       (3,494 )     (5,712 )
Total other income (expenses), net   (23,485 )     1,534       (55,095 )     (30,207 )
Income before income taxes $ 357,732     $ 276,801     $ 1,264,798     $ 1,101,664  
Income taxes   65,495       47,137       243,847       204,108  
Net income $ 292,237     $ 229,664     $ 1,020,951     $ 897,556  
               
Basic earnings per share $ 1.99     $ 1.56     $ 6.94     $ 6.12  
Diluted earnings per share $ 1.98     $ 1.56     $ 6.92     $ 6.09  
Non-GAAP diluted earnings per share(1) $ 2.08     $ 1.60     $ 7.72     $ 6.44  
               
Basic shares outstanding   146,915       147,015       147,021       146,765  
Diluted shares outstanding   147,533       147,554       147,550       147,455  

(1) See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

Condensed Consolidated Balance Sheets
(Unaudited; $ in thousands)

  June 30,
2024
  June 30,
2023
Assets      
Current assets:      
Cash and cash equivalents $ 238,361     $ 227,891  
Accounts receivable, net   837,275       704,909  
Inventories   822,250       998,012  
Prepayments and other current assets   459,833       437,018  
Total current assets $ 2,357,719     $ 2,367,830  
Non-current assets:      
Property, plant, and equipment, net $ 548,025     $ 537,856  
Operating lease right-of-use assets   151,121       127,955  
Goodwill and other intangibles, net   3,327,959       3,322,640  
Deferred income taxes and other non-current assets   487,570       395,427  
Total non-current assets $ 4,514,675     $ 4,383,878  
Total assets $ 6,872,394     $ 6,751,708  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 237,728     $ 150,756  
Accrued expenses   377,678       365,660  
Operating lease liabilities, current   25,278       21,919  
Deferred revenue   152,554       138,072  
Income taxes payable   107,517       72,224  
Short-term debt   9,900       9,902  
Total current liabilities $ 910,655     $ 758,533  
Non-current liabilities:      
Deferred revenue $ 137,343     $ 119,186  
Deferred income taxes   79,339       90,650  
Operating lease liabilities, non-current   141,444       116,853  
Other long-term liabilities   42,257       68,166  
Long-term debt   697,313       1,431,234  
Long-term income taxes payable         37,183  
Total non-current liabilities $ 1,097,696     $ 1,863,272  
Total liabilities $ 2,008,351     $ 2,621,805  
Stockholders’ equity      
Common stock $ 588     $ 588  
Additional paid-in capital   1,896,604       1,772,083  
Retained earnings   4,991,647       4,253,016  
Treasury stock   (1,773,267 )     (1,623,256 )
Accumulated other comprehensive income   (251,529 )     (272,528 )
Total stockholders’ equity $ 4,864,043     $ 4,129,903  
Total liabilities and stockholders’ equity $ 6,872,394     $ 6,751,708  

Condensed Consolidated Statements of Cash Flows
(Unaudited; $ in thousands)

  Three Months Ended   Twelve Months Ended
  June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2023
Cash flows from operating activities:              
Net income $ 292,237     $ 229,664     $ 1,020,951     $ 897,556  
Adjustment to reconcile net income to cash provided by operating activities:              
Depreciation and amortization   43,677       46,760       176,870       165,156  
Amortization of right-of-use assets   11,077       8,440       39,339       32,406  
Stock-based compensation costs   21,392       19,927       80,184       71,142  
(Gain) loss attributable to equity method investments, net of dividends received   (868 )     5,102       1,848       10,138  
(Gain) loss on equity investments   15,473       1,584       4,045       (9,922 )
Non-cash restructuring expenses         9,177       33,239       9,177  
Gain on insurance recoveries         (20,227 )           (20,227 )
Changes in operating assets and liabilities:              
Accounts receivable, net   (57,523 )     (18,059 )     (134,278 )     (106,511 )
Inventories, net   8,910       6,257       172,203       (248,833 )
Prepaid expenses, net deferred income taxes and other current assets   (16,237 )     (51,518 )     (115,213 )     (138,125 )
Accounts payable, accrued expenses, income taxes payable and other   121,975       330       122,072       31,342  
Net cash provided by operating activities $ 440,113     $ 237,437     $ 1,401,260     $ 693,299  
Cash flows from investing activities:              
Purchases of property, plant, and equipment   (24,881 )     (34,449 )     (99,460 )     (119,672 )
Patent registration and acquisition costs   (1,442 )     (4,285 )     (15,396 )     (14,328 )
Business acquisitions, net of cash acquired   (19,697 )     (1,524 )     (133,464 )     (1,012,749 )
Purchases of investments   (3,073 )     (2,500 )     (12,765 )     (32,229 )
Proceeds from exits of investments   750             1,000       3,937  
(Payments) / proceeds on maturity of foreign currency contracts   1,833       (3,765 )     (9,699 )     15,196  
Net cash used in investing activities $ (46,510 )   $ (46,523 )   $ (269,784 )   $ (1,159,845 )
Cash flows from financing activities:              
Proceeds from issuance of common stock, net   27,696       23,493       53,094       49,142  
Purchases of treasury stock   (50,004 )           (150,011 )      
Taxes paid related to net share settlement of equity awards   (421 )     (334 )     (8,757 )     (30,631 )
Payments of business combination contingent consideration         (2,045 )     (1,293 )     (2,361 )
Proceeds from borrowings, net of borrowing costs               105,000       1,070,000  
Repayment of borrowings   (300,000 )     (145,000 )     (835,000 )     (405,000 )
Dividends paid   (70,553 )     (64,705 )     (282,320 )     (258,276 )
Net cash (used in) / provided by financing activities $ (393,282 )   $ (188,591 )   $ (1,119,287 )   $ 422,874  
Effect of exchange rate changes on cash $ 130     $ (2,326 )   $ (1,719 )   $ (2,147 )
Net increase / (decrease) in cash and cash equivalents   451       (3 )     10,470       (45,819 )
Cash and cash equivalents at beginning of period   237,910       227,894       227,891       273,710  
Cash and cash equivalents at end of period $ 238,361     $ 227,891     $ 238,361     $ 227,891  


Reconciliation of Non-GAAP Financial Measures

(Unaudited; $ in thousands, except for per share amounts)

The measures “non-GAAP gross profit” and “non-GAAP gross margin” exclude amortization expense from acquired intangibles and restructuring expense related to cost of sales and are reconciled below:

  Three Months Ended   Twelve Months Ended
  June 30, 2024   June 30, 2023   June 30, 2024   June 30, 2023
               
Revenue $ 1,223,195     $ 1,122,057     $ 4,685,297     $ 4,222,993  
               
GAAP cost of sales $ 507,668     $ 504,671     $ 2,029,994     $ 1,867,331  
Less:Amortization of acquired intangibles(A)   (7,987 )     (8,395 )     (32,963 )     (30,396 )
Less: Masks with magnets field safety notification expenses(A)               (6,351 )      
Less: Astral field safety notification expenses(A)               (7,911 )      
Non-GAAP cost of sales $ 499,681     $ 496,276     $ 1,982,769     $ 1,836,935  
               
GAAP gross profit $ 715,527     $ 617,386     $ 2,655,303     $ 2,355,662  
GAAP gross margin   58.5 %     55.0 %     56.7 %     55.8 %
Non-GAAP gross profit $ 723,514     $ 625,781     $ 2,702,528     $ 2,386,058  
Non-GAAP gross margin   59.1 %     55.8 %     57.7 %     56.5 %

The measure “non-GAAP income from operations” is reconciled with GAAP income from operations below:

  Three Months Ended   Twelve Months Ended
  June 30, 2024   June 30, 2023   June 30, 2024   June 30, 2023
               
GAAP income from operations $ 381,217   $ 275,267   $ 1,319,893   $ 1,131,871
Amortization of acquired intangibles—cost of sales(A)   7,987     8,395     32,963     30,396
Amortization of acquired intangibles—operating expenses(A)   11,262     12,319     46,521     42,020
Restructuring(A)       9,177     64,228     9,177
Masks with magnets field safety notification expenses(A)           6,351    
Astral field safety notification expenses(A)           7,911    
Acquisition-related expenses(A)       1,792     483     10,949
Non-GAAP income from operations $ 400,466   $ 306,950   $ 1,478,350   $ 1,224,413


Reconciliation of Non-GAAP Financial Measures

(Unaudited; $ in thousands, except for per share amounts)

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, 2024   June 30, 2023   June 30, 2024   June 30, 2023
               
GAAP net income $ 292,237     $ 229,664     $ 1,020,951     $ 897,556  
Amortization of acquired intangibles—cost of sales(A)   7,987       8,395       32,963       30,396  
Amortization of acquired intangibles—operating expenses(A)   11,262       12,319       46,521       42,020  
Restructuring expenses(A)         9,177       64,228       9,177  
Masks with magnets field safety notification expenses(A)               6,351        
Astral field safety notification expenses(A)               7,911        
Acquisition-related expenses(A)         1,792       483       10,949  
Gain on insurance recoveries(A)         (20,227 )           (20,227 )
Income tax effect on non-GAAP adjustments(A)   (5,145 )     (5,631 )     (40,114 )     (20,114 )
Non-GAAP net income(A) $ 306,341     $ 235,489     $ 1,139,294     $ 949,757  
               
GAAP diluted shares outstanding   147,533       147,554       147,550       147,455  
GAAP diluted earnings per share $ 1.98     $ 1.56     $ 6.92     $ 6.09  
Non-GAAP diluted earnings per share(A) $ 2.08     $ 1.60     $ 7.72     $ 6.44  

(A) ResMed adjusts for the impact of the amortization of acquired intangibles, restructuring expenses, field safety notification expenses, acquisition-related expenses, gain on insurance recoveries, and associated tax effects 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 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.


Revenue by Product and Region

(Unaudited; $ in millions, except for per share amounts)

  Three Months Ended
  June 30,
2024
(A) June 30,
2023
(A) % Change   Constant
Currency(B)
U.S., Canada, and Latin America              
Devices $ 406.2   $ 387.2   5 %    
Masks and other   321.2     273.7   17      
Total U.S., Canada and Latin America $ 727.4   $ 660.9   10      
               
Combined Europe, Asia, and other markets              
Devices $ 228.8   $ 215.2   6 %   8 %
Masks and other   115.0     107.4   7     9  
Total Combined Europe, Asia and other markets $ 343.9   $ 322.6   7     8  
               
Global revenue              
Total Devices $ 635.1   $ 602.4   5 %   6 %
Total Masks and other   436.2     381.0   14     15  
Total Sleep and Respiratory Care $ 1,071.3   $ 983.5   9     9  
               
Software as a Service   151.9     138.6   10     10  
Total $ 1,223.2   $ 1,122.1   9     10  
               
  Twelve Months Ended
  June 30,
2024
(A) June 30,
2023
(A) %
Change
  Constant
Currency(B)
U.S., Canada, and Latin America              
Devices $ 1,522.8   $ 1,444.4   5 %    
Masks and other   1,199.8     1,039.0   15      
Total U.S., Canada and Latin America $ 2,722.6   $ 2,483.4   10      
               
Combined Europe, Asia, and other markets              
Devices $ 921.3   $ 826.3   11 %   10 %
Masks and other   457.4     415.3   10     8  
Total Combined Europe, Asia and other markets $ 1,378.6   $ 1,241.6   11     10  
               
Global revenue              
Total Devices $ 2,444.0   $ 2,270.7   8 %   7 %
Total Masks and other   1,657.2     1,454.3   14     13  
Total Sleep and Respiratory Care $ 4,101.2   $ 3,725.0   10     10  
               
Software as a Service   584.1     498.0   17     17  
Total $ 4,685.3   $ 4,223.0   11     11  

(A) Totals and subtotals may not add due to rounding.

(B) 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.


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