SAN DIEGO, July 30, 2015 /PRNewswire/ -- ResMed Inc. (NYSE: RMD) today announced results for its quarter ended June 30, 2015. Revenue for the quarter was $453.1 million, a 9 percent increase compared with the quarter ended June 30, 2014 (a 17 percent increase on a constant currency basis). Net income was $87.5 million, consistent with the quarter ended June 30, 2014. Diluted earnings per share for the quarter were $0.61, consistent with the quarter ended June 30, 2014.
The results for the quarter ended June 30, 2015 were impacted by two non-recurring items: first, expenses of $5.0 million ($3.5 million, net of tax) associated with the field safety notice in response to results of the SERVE-HF clinical trial and second, donations of $6.0 million ($3.8 million, net of tax), which were comprised of a $5.0 million donation to the University of California - San Diego to fund a center of excellence and endowed chair in the field of pulmonary and critical care medicine and an incremental donation of $1.0 million to the ResMed Foundation. Non-GAAP net income for the quarter ended June 30, 2015 was $96.4 million, a 3 percent increase compared with the quarter ended June 30, 2014 (non-GAAP measures exclude the impact of expenses associated with the SERVE-HF field safety notice, donations and amortization of acquired intangibles in the current quarter and the restructuring expenses and amortization of acquired intangibles in the prior year quarter). Non-GAAP diluted earnings per share for the quarter were $0.68, a 3 percent increase compared with the quarter ended June 30, 2014.
"We finished the year with strong double-digit constant currency revenue growth and greater than 50 percent flow generator growth in the Americas during the fourth quarter. As expected, we have also achieved a solid return to growth in our mask business. We have continued our active share repurchase program and the board has also declared an increase in our dividend," said Mick Farrell, ResMed's chief executive officer. "This quarter we grew our healthcare informatics capability with the acquisition of CareTouch and earlier today, we announced the acquisition of Curative Medical, an investment in China that will provide a complementary brand with a robust respiratory care and sleep apnea product portfolio. We will continue to invest in R&D and manufacturing for the Curative brand in China as we grow our new ResMed-Curative business." Farrell concluded, "Our global team ended fiscal year 2015 with a strong $1.7 billion in revenues as we continue to drive towards our goal of changing 20 million lives by 2020 with innovative products and solutions that improve patient outcomes, reduce the impact of chronic disease and lower healthcare costs."
Analysis of fourth quarter results
In the fourth quarter of fiscal year 2015, revenue in the Americas was $273.7 million, a 27 percent increase over the prior year's quarter. Revenue in combined Europe and Asia Pacific was $179.4 million, a 10 percent decrease compared with the quarter ended June 30, 2014 (a 5 percent increase on a constant currency basis).
Including one-off expenses of $5.0 million in relation to the SERVE-HF field safety notice, gross margin in the fourth quarter was 57.3 percent. Excluding these one-off expenses, the gross margin for Q4 FY15 was 58.4%, lower than the prior year's quarter, mainly due to an unfavorable impact from foreign exchange rate movements, an unfavorable geographic mix, declines in average selling prices and an unfavorable product mix.
Selling, general and administrative expenses were $123.2 million for the fourth quarter of fiscal year 2015, a 1 percent increase (a 12 percent increase on a constant currency basis) over the quarter ended June 30, 2014. SG&A expenses improved to 27.2 percent of revenue in the quarter, compared with 29.4 percent in the quarter ended June 30, 2014.
Research and development expenses were $28.5 million for the fourth quarter of fiscal year 2015, or 6.3 percent of revenue. R&D expenses decreased by 10 percent (a 5 percent increase on a constant currency basis) compared with the quarter ended June 30, 2014.
Amortization of acquired intangible assets was $2.1 million during the quarter. Stock-based compensation costs incurred during the quarter of $13.1 million consisted of expenses associated with employee equity grants, and the company's employee stock purchase plan.
Operating profit for the quarter was $99.5 million and cash flow from operations was $99.6 million.
Fiscal year 2015 results
Revenue for the year ended June 30, 2015 was $1.7 billion, an 8 percent increase compared with the year ended June 30, 2014 (a 13 percent increase on a constant currency basis). Net income was $352.9 million, a 2% increase compared with the year ended June 30, 2014. Diluted earnings per share for the year were $2.47, a 3% increase compared with the year ended June 30, 2014. Non-GAAP earnings per share for the year were $2.57, a 4% increase compared with the year ended June 30, 2014.
Share repurchase program
During the quarter, the company repurchased 941,000 shares at a cost of $55.9 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, an increase of 7 percent from the previous dividend. The dividend will have a record date of August 20, 2015, payable on September 17, 2015. 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 August 18, 2015 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 August 18, 2015 through August 20, 2015, 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 "Q4 2015 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 77902512. The telephone replay will be available until August 13, 2015.
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--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 Twelve Months Ended June 30, June 30, 2015 2014 2015 2014 ---- ---- ---- ---- Net revenue $453,064 $415,211 $1,678,912 $1,554,973 Cost of sales 188,605 153,953 662,487 565,187 SERVE-HF field safety notice expenses(1) 5,029 - 5,029 - Gross profit 259,430 261,258 1,011,396 989,786 ------------ ------- ------- --------- ------- Operating expenses: Selling, general and administrative 123,250 122,242 472,627 450,414 Research and development 28,523 31,796 114,865 118,226 Restructuring expenses(1) - 6,326 - 6,326 Donations(1) 6,000 - 6,000 - Amortization of acquired intangible assets 2,110 2,408 8,668 9,733 Total operating expenses 159,883 162,772 602,160 584,699 ---------- ------- ------- ------- ------- Income from operations(1) 99,547 98,486 409,236 405,087 -------------- ------ ------ ------- ------- Other income (expenses), net: Interest income (expense), net 4,666 5,925 20,430 25,107 Other, net (97) 2,224 6,250 884 Total other income (expenses), net 4,569 8,149 26,680 25,991 ------------ ----- ----- ------ ------ Income before income taxes 104,116 106,635 435,916 431,078 Income taxes 16,654 18,897 83,030 85,805 Net income(1) $87,462 $87,738 $352,886 $345,273 ---------- ------- ------- -------- -------- Basic earnings per share $0.62 $0.62 $2.51 $2.44 Diluted earnings per share(1) $0.61 $0.61 $2.47 $2.39 Non-GAAP diluted donations, earnings restructuring per share, expenses excluding and the impact amortization of SERVE- of acquired HF field intangible safety assets(1) notice expenses, $0.68 $0.66 $2.57 $2.47 Basic shares outstanding 140,819 140,537 140,468 141,474 Diluted shares outstanding 142,702 143,086 142,687 144,359 ------------ ------- ------- ------- -------
(1) See reconciliation of non- GAAP financial measures in table at end of press release.
RESMED INC AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited - In thousands) June 30, June 30, 2015 2014 ---- ---- ASSETS Current assets: Cash and cash equivalents $717,249 $905,730 Accounts receivable, net 362,568 359,593 Inventories 246,859 165,418 Prepayments, deferred income taxes and other current assets 117,506 125,468 Total current assets 1,444,182 1,556,209 -------------------- --------- --------- Property, plant and equipment, net 387,758 434,277 Goodwill and other intangible assets, net 311,403 334,510 Deferred income taxes and other non-current assets 40,917 35,966 Total non-current assets 740,078 804,753 ------------------------ ------- ------- Total assets $2,184,260 $2,360,962 ------------ ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $81,112 $85,405 Accrued expenses 132,976 130,656 Deferred revenue 36,097 42,370 Income taxes payable 16,278 10,392 Deferred income taxes 796 717 Current portion of long-term debt 0 18 ---------------------------- --- --- Total current liabilities 267,259 269,558 ------------------------- ------- ------- Non-current liabilities: Deferred income taxes 8,062 10,716 Deferred revenue 19,284 16,352 Income taxes payable 1,754 5,318 Non-current portion of long- term debt 300,594 300,770 Total non-current liabilities 329,694 333,156 ----------------------------- ------- ------- Total liabilities 596,953 602,714 ----------------- ------- ------- STOCKHOLDERS' EQUITY: Common stock 562 561 Additional paid-in capital 1,228,795 1,117,644 Retained earnings 1,976,020 1,780,396 Treasury stock (1,444,554) (1,291,910) Accumulated other comprehensive income (173,516) 151,557 --------------------- -------- ------- Total stockholders' equity $1,587,307 $1,758,248 -------------------------- ---------- ---------- Total liabilities and stockholders' equity $2,184,260 $2,360,962
RESMED INC AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited - In thousands) Year Ended Year Ended June 30, June 30, 2015 2014 ---- ---- Cash flows from operating activities: Net income $352,886 $345,273 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 73,056 73,454 Changes in fair value of business combination contingent consideration (132) (6,283) Gain on disposal of business (709) - Stock- based compensation costs 47,855 43,457 Excess tax benefit from stock- based compensation arrangements (24,959) (16,335) Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net (28,259) (35,108) Inventories, net (99,524) (15,851) Prepaid expenses, net deferred income taxes and other current assets (22,849) 5,814 Accounts payable, accrued expenses and other liabilities 85,815 (3,153) Net cash provided by operating activities 383,180 391,268 ----------- ------- ------- Cash flows from investing activities: Purchases of property, plant and equipment (62,502) (72,722) Patent registration costs (9,442) (8,434) Business acquisitions, net of cash acquired (29,407) (3,852) Investments in cost- method investments (10,750) (10,850) Proceeds from sale of business 937 - Purchases of foreign currency contracts (700) (1,477) (Payments) / Proceeds on maturity of foreign currency contracts (31,207) 2,348 Net cash used in investing activities (143,071) (94,987) ----------- -------- ------- Cash flows from financing activities: Proceeds from issuance of common stock, net 38,806 33,354 Excess tax benefit from stock- based compensation arrangements 24,959 16,335 Purchases of treasury stock (160,300) (202,169) Payment of business combination contingent consideration (458) (1,117) Proceeds from borrowings, net of borrowing costs 160,000 557,834 Repayment of borrowings (161,536) (560,035) Dividends paid (157,262) (141,518) --------- -------- -------- Net cash (used in) / provided by financing activities (255,791) (297,316) ----------- -------- -------- Effect of exchange rate changes on cash (172,799) 30,717 --------- -------- ------ Net increase / (decrease) in cash and cash equivalents (188,481) 29,682 Cash and cash equivalents at beginning of period 905,730 876,048 Cash and cash equivalents at end of period 717,249 905,730 ------------ ------- -------
Reconciliation of Non-GAAP Financial Measures (Unaudited) (In US$ thousands, except share and per share data) The measure, "non-GAAP operating income" is reconciled with GAAP income from operations below: Three Months Ended Twelve Months Ended June 30, June 30, 2015 2014 2015 2014 ---- ---- ---- ---- GAAP income from operations 99,547 98,486 409,236 405,087 SERVE- HF field safety notice expenses 5,029 - 5,029 - Donations 6,000 - 6,000 - Restructuring expenses - 6,326 - 6,326 Amortization of acquired intangible assets (A) 2,110 2,408 8,668 9,733 Non- GAAP safety intangible operating notice assets) income expenses, (excluding donations, the restructuring impact expenses of and SERVE- amortization HF of field 112,686 107,220 428,933 421,146 -------------- ------- ------- ------- ------- 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, June 30, 2015 2014 2015 2014 ---- ---- ---- ---- GAAP net income 87,462 87,738 352,886 345,273 SERVE- HF field safety notice expenses, net of tax (A) 3,521 - 3,521 - Donations, net of tax (A) 3,796 - 3,796 - Restructuring expenses, net of tax (A) - 4,222 - 4,222 Amortization of acquired intangible assets, net of tax (A) 1,600 1,843 6,551 7,406 Non- GAAP net income (A) 96,379 93,803 366,754 356,901 Diluted shares outstanding 142,702 143,086 142,687 144,359 GAAP diluted earnings per share $0.61 $0.61 $2.47 $2.39 Non- GAAP diluted earnings per share (A) $0.68 $0.66 $2.57 $2.47 --------- ----- ----- ----- -----
(A) ResMed excludes SERVE-HF field safety notice expenses, donations, 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 SERVE-HF field safety notice expenses, donations, restructuring expenses and the 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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