RMD ResMed Inc

Year-over-year revenue grows 9%, operating profit up 38%, non-GAAP operating profit up 30%

Operating cash flow of $440 million

Quarterly dividend increases 10% to $0.53 per share

Company to host an Investor Day on September 30, 2024

Revenue increased by 9% to $1.2 billion; up 10% on a constant currency basis

Gross margin improved 350 bps to 58.5%; non-GAAP gross margin improved 330 bps to 59.1%

Income from operations increased 38%; non-GAAP income from operations up 30%

Operating cash flow of $440 million and debt repayments of $300 million

Diluted earnings per share of $1.98; non-GAAP diluted earnings per share of $2.08

Revenue increased by 11% to $4.7 billion; up 11% on a constant currency basis

Gross margin improved 90 bps to 56.7%; non-GAAP gross margin improved 120 bps to 57.7%

Income from operations increased 17%; non-GAAP income from operations up 21%

Operating cash flow of $1.4 billion and debt repayments of $0.8 billion

Diluted earnings per share of $6.92; non-GAAP diluted earnings per share of $7.72

Revenue

Gross margin

Non-GAAP gross margin ^(B)

Selling, general, and administrative expenses

Research and development expenses

Income from operations

Non-GAAP income from operations ^(B)

Net income

Non-GAAP net income ^(B)

Diluted earnings per share

Non-GAAP diluted earnings per share ^(B)

Revenue

Gross margin

Non-GAAP gross margin ^(B)

Selling, general, and administrative expenses

Research and development expenses

Income from operations

Non-GAAP income from operations ^(B)

Net income

Non-GAAP net income ^(B)

Diluted earnings per share

Non-GAAP diluted earnings per share ^(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.

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

Revenue grew by 10 percent on a constant currency basis, driven by increased demand for our sleep devices and masks portfolio, as well as strong growth across our Software as a Service business.

Revenue in the U.S., Canada, and Latin America, excluding Software as a Service, grew by 10 percent.

Revenue in Europe, Asia, and other markets, excluding Software as a Service, grew by 8 percent on a constant currency basis.

Software as a Service revenue increased by 10 percent, reflecting continued organic growth in our SaaS portfolio.

Gross margin increased by 350 basis points mainly due to reduced freight and manufacturing cost improvements, an increase in average selling prices as well as favorable product mix. Non-GAAP gross margin increased by 330 basis points due to the same factors.

Selling, general, and administrative expenses increased by 1 percent on a constant currency basis. SG&A expenses improved to 19.8 percent of revenue in the quarter, compared with 21.5 percent in the same period of the prior year. The modest increase in SG&A expenses reflects cost management initiatives implemented during the December quarter.

Income from operations increased by 38 percent, and non-GAAP income from operations increased by 30 percent.

Net income for the quarter was $292 million and diluted earnings per share was $1.98. Non-GAAP net income increased by 30 percent to $306 million, and non-GAAP diluted earnings per share increased by 30 percent to $2.08, predominantly attributable to strong sales and gross margin improvement as well as modest growth in operating expenses.

Operating cash flow for the quarter was $440 million, compared to net income in the current quarter of $292 million and non-GAAP net income of $306 million.

During the quarter, we paid $71 million in dividends and repurchased 232,000 shares for consideration of $50 million as part of our ongoing capital management.

Supported the presentation of 39 clinical research abstracts at the annual American Thoracic Society (26 abstracts) and SLEEP (13 abstracts) conferences, demonstrating the breadth and depth of ResMed’s leadership in generating and analyzing real-world evidence in support of better clinical and patient outcomes. Research focused on a variety of topics including the increasing prevalence of Obstructive Sleep Apnea (OSA), the economic benefits of treating OSA, and the relationship between OSA and depression in women.

Net revenue

Cost of sales

Amortization of acquired intangibles ⁽¹⁾

Masks with magnets field safety notification expenses ⁽¹⁾

Astral field safety notification expenses ⁽¹⁾

Total cost of sales

Gross profit

Selling, general, and administrative

Research and development

Amortization of acquired intangibles ⁽¹⁾

Restructuring expenses ⁽¹⁾

Acquisition related expenses ⁽¹⁾

Total operating expenses

Income from operations

Other income (expenses), net:

Interest expense, net

Gain (loss) attributable to equity method investments

Gain on equity investments ⁽¹⁾

Gain on insurance recoveries ⁽¹⁾

Other, net

Total other income (expenses), net

Income before income taxes

Income taxes

Net income

Basic earnings per share

Diluted earnings per share

Non-GAAP diluted earnings per share ⁽¹⁾

Basic shares outstanding

Diluted shares outstanding

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

Assets

Current assets:

Cash and cash equivalents

Accounts receivable, net

Inventories

Prepayments and other current assets

Total current assets

Non-current assets:

Property, plant, and equipment, net

Operating lease right-of-use assets

Goodwill and other intangibles, net

Deferred income taxes and other non-current assets

Total non-current assets

Total assets

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

Accrued expenses

Operating lease liabilities, current

Deferred revenue

Income taxes payable

Short-term debt

Total current liabilities

Non-current liabilities:

Deferred revenue

Deferred income taxes

Operating lease liabilities, non-current

Other long-term liabilities

Long-term debt

Long-term income taxes payable

Total non-current liabilities

Total liabilities

Stockholders’ equity

Common stock

Additional paid-in capital

Retained earnings

Treasury stock

Accumulated other comprehensive income

Total stockholders’ equity

Total liabilities and stockholders’ equity

Cash flows from operating activities:

Net income

Adjustment to reconcile net income to cash provided by operating activities:

Depreciation and amortization

Amortization of right-of-use assets

Stock-based compensation costs

(Gain) loss attributable to equity method investments, net of dividends received

(Gain) loss on equity investments

Non-cash restructuring expenses

Gain on insurance recoveries

Changes in operating assets and liabilities:

Accounts receivable, net

Inventories, net

Prepaid expenses, net deferred income taxes and other current assets

Accounts payable, accrued expenses, income taxes payable and other

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property, plant, and equipment

Patent registration and acquisition costs

Business acquisitions, net of cash acquired

Purchases of investments

Proceeds from exits of investments

(Payments) / proceeds on maturity of foreign currency contracts

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock, net

Purchases of treasury stock

Taxes paid related to net share settlement of equity awards

Payments of business combination contingent consideration

Proceeds from borrowings, net of borrowing costs

Repayment of borrowings

Dividends paid

Net cash (used in) / provided by financing activities

Effect of exchange rate changes on cash

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Revenue

GAAP cost of sales

Less: Amortization of acquired intangibles ^(A)

Less: Masks with magnets field safety notification expenses ^(A)

Less: Astral field safety notification expenses ^(A)

Non-GAAP cost of sales

GAAP gross profit

GAAP gross margin

Non-GAAP gross profit

Non-GAAP gross margin

GAAP income from operations

Amortization of acquired intangibles—cost of sales ^(A)

Amortization of acquired intangibles—operating expenses ^(A)

Restructuring ^(A)

Masks with magnets field safety notification expenses ^(A)

Astral field safety notification expenses ^(A)

Acquisition-related expenses ^(A)

Non-GAAP income from operations

GAAP net income

Amortization of acquired intangibles—cost of sales ^(A)

Amortization of acquired intangibles—operating expenses ^(A)

Restructuring expenses ^(A)

Masks with magnets field safety notification expenses ^(A)

Astral field safety notification expenses ^(A)

Acquisition-related expenses ^(A)

Gain on insurance recoveries ^(A)

Income tax effect on non-GAAP adjustments ^(A)

Non-GAAP net income ^(A)

GAAP diluted shares outstanding

GAAP diluted earnings per share

Non-GAAP diluted earnings per share ^(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.

U.S., Canada, and Latin America

Devices

Masks and other

Total U.S., Canada and Latin America

Combined Europe, Asia, and other markets

Devices

Masks and other

Total Combined Europe, Asia and other markets

Global revenue

Total Devices

Total Masks and other

Total Sleep and Respiratory Care

Software as a Service

Total

U.S., Canada, and Latin America

Devices

Masks and other

Total U.S., Canada and Latin America

Combined Europe, Asia, and other markets

Devices

Masks and other

Total Combined Europe, Asia and other markets

Global revenue

Total Devices

Total Masks and other

Total Sleep and Respiratory Care

Software as a Service

Total

Totals and subtotals may not add due to rounding.

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.