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

  • Year-over-year revenue grows 7%, operating profit up 25%, non-GAAP operating profit up 23%
  • Operating cash flows of $402 million

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, April 25, 2024 (GLOBE NEWSWIRE) — ResMed Inc. (NYSE: RMD, ASX: RMD) today announced results for its quarter ended March 31, 2024.

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

  • Revenue increased by 7% to $1.2 billion; up 7% on a constant currency basis 
  • Gross margin grew 260 bps to 57.9%; non-GAAP gross margin grew 240 bps to 58.5%
  • Income from operations increased 25%; non-GAAP operating profit up 23%
  • Operating cash flow of $402 million and debt repayments of $220 million
  • Diluted earnings per share of $2.04; non-GAAP diluted earnings per share of $2.13

“ResMed’s strong third-quarter fiscal year 2024 results reflect robust patient and customer demand for our products and software solutions, leading to double-digit mask and accessories revenue growth along with ongoing operational efficiencies to drive margin improvement and increased profitability, resulting in double-digit growth in both operating profit and earnings per share,” said Mick Farrell, ResMed’s Chairman & CEO. “Over 2 billion people worldwide can benefit from a ResMed solution to help them sleep better, breathe better, and receive best-in-class healthcare right where they live. We remain laser-focused on bringing market-leading innovation to customers, including our latest AirCurve11 range of non-invasive ventilators and our recently launched AirFit F40 mask system, combined with our entire portfolio of products, software, and solutions, allowing us to continue to deliver value for all our stakeholders.”

Financial Results and Operating Metrics
Unaudited; $ in millions, except for per share amounts

  Three Months Ended
  March 31,
2024
  March 31,
2023
  % Change   Constant
Currency (A)
Revenue $ 1,197.0     $ 1,116.9     7 %   7 %
Gross margin   57.9 %     55.3 %   5      
Non-GAAP gross margin (B)   58.5 %     56.1 %   4      
Selling, general, and administrative expenses   229.9       228.5     1     1  
Research and development expenses   77.1       76.4     1     2  
Income from operations   374.6       300.7     25      
Non-GAAP income from operations (B)   393.6       321.2     23      
Net income   300.5       232.5     29      
Non-GAAP net income (B)   314.4       247.8     27      
Diluted earnings per share $ 2.04     $ 1.58     29      
Non-GAAP diluted earnings per share (B) $ 2.13     $ 1.68     27      

  Nine Months Ended
  March 31,
2024
  March 31,
2023
  % Change   Constant
Currency (A)
Revenue $ 3,462.1     $ 3,100.9     12 %   11 %
Gross margin   56.0 %     56.1 %        
Non-GAAP gross margin (B)   57.2 %     56.8 %   1      
Selling, general, and administrative expenses   674.9       633.3     7     6  
Research and development expenses   226.7       209.5     8     9  
Income from operations   938.7       856.6     10      
Non-GAAP income from operations (B)   1,077.9       917.5     17      
Net income   728.7       667.9     9      
Non-GAAP net income (B)   833.0       714.3     17      
Diluted earnings per share $ 4.94     $ 4.53     9      
Non-GAAP diluted earnings per share (B) $ 5.65     $ 4.85     16      
 

(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 Third Quarter Results
All comparisons are to the prior year period unless otherwise noted

  • Revenue grew by 7 percent on a constant currency basis, driven by increased demand for our sleep devices, as well as strong growth across our mask product portfolio.
    • Revenue in the U.S., Canada, and Latin America, excluding Software-as-a-Service, grew by 9 percent.
    • Revenue in Europe, Asia, and other markets, excluding Software-as-a-Service, grew by 3 percent on a constant currency basis.
    • Software-as-a-Service revenue increased by 8 percent, reflecting continued organic growth in our SaaS portfolio.
  • Gross margin increased by 260 basis points mainly due to reduced freight and manufacturing cost improvements. Non-GAAP gross margin increased by 240 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 19.2 percent of revenue in the quarter, compared with 20.5 percent in the same period of the prior year. The modest increase in SG&A expenses reflects cost management initiatives implemented in the previous quarter.
  • Income from operations increased by 25 percent, and non-GAAP income from operations increased by 23 percent.
  • Net income for the quarter was $300 million and diluted earnings per share was $2.04. Non-GAAP net income increased by 27 percent to $314 million, and non-GAAP diluted earnings per share increased by 27 percent to $2.13, predominantly attributable to strong sales and gross margin as well as modest growth in operating expenses.
  • Operating cash flow for the quarter was $402 million, compared to net income in the current quarter of $300 million and non-GAAP net income of $314 million.
  • During the quarter, we paid $70 million in dividends and repurchased 261,000 shares for consideration of $50 million as part of our ongoing capital management.

Other Business and Operational Highlights

  • Introduced the AirCurve™ 11 series of devices, built on the market-leading AirSense 11 platform. New devices provide bi-level and enhanced ventilation therapy options, particularly for those who struggle with single pressure PAP therapy.
  • Launched the AirFit F40 in the U.S. An ultra-compact, full-face mask, the AirFit F40 features the AdaptiSeal™, a silicone cushion designed to maintain a facial seal, even when moving around during sleep, along with a fully flexible frame, a quick-release short tube, and new textile material and color.
  • In conjunction with World Sleep Day, a global campaign to raise awareness of the importance of good sleep, published the results of our 4th annual Global Sleep Survey of 36,000 people across 17 markets. Survey found 50% of respondents report feeling excessive daytime sleepiness and 40% report getting no more than three nights of good sleep per week. More than one-third of respondents are now actively tracking their sleep patterns, either through a smartphone app (44%) or wearable (31%).

Dividend program
The ResMed board of directors today declared a quarterly cash dividend of $0.48 per share. The dividend will have a record date of May 9, 2024, payable on June 13, 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 May 8, 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 May 8, 2024, through May 9, 2024, inclusive. 

Webcast details
ResMed will discuss its third 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 “Q3 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 13745785. The telephone replay will be available until May 9, 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 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.

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RESMED INC. AND SUBSIDIARIES

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

  Three Months Ended   Nine Months Ended
  March 31,
2024
  March 31,
2023
  March 31,
2024
  March 31,
2023
               
Net revenue $ 1,196,980     $ 1,116,898     $ 3,462,102     $ 3,100,936  
               
Cost of sales   496,387       490,824       1,483,088       1,340,660  
Amortization of acquired intangibles (1)   7,812       8,322       24,976       22,001  
Masks with magnets field safety notification expenses (1)               6,351        
Astral field safety notification expenses (1)               7,911        
Total cost of sales $ 504,199     $ 499,146     $ 1,522,326     $ 1,362,661  
Gross profit $ 692,781     $ 617,752     $ 1,939,776     $ 1,738,275  
               
Selling, general, and administrative   229,919       228,457       674,948       633,317  
Research and development   77,074       76,436       226,664       209,498  
Amortization of acquired intangibles (1)   11,204       12,188       35,259       29,701  
Restructuring expenses (1)               64,228        
Acquisition related expenses (1)                     9,157  
Total operating expenses $ 318,197     $ 317,081     $ 1,001,099     $ 881,673  
Income from operations $ 374,584     $ 300,671     $ 938,677     $ 856,602  
               
Other income (expenses), net:              
Interest income (expense), net $ (11,026 )   $ (14,964 )   $ (39,787 )   $ (32,436 )
Gain (loss) attributable to equity method investments   440       (183 )     (2,716 )     (5,037 )
Gain on equity investments (1)   13,919       6,418       11,429       11,506  
Other, net   (2,496 )     (2,564 )     (537 )     (5,773 )
Total other income (expenses), net   837       (11,293 )     (31,611 )     (31,740 )
Income before income taxes $ 375,421     $ 289,378     $ 907,066     $ 824,862  
Income taxes   74,929       56,878       178,351       156,970  
Net income $ 300,492     $ 232,500     $ 728,715     $ 667,892  
               
Basic earnings per share $ 2.04     $ 1.58     $ 4.96     $ 4.55  
Diluted earnings per share $ 2.04     $ 1.58     $ 4.94     $ 4.53  
Non-GAAP diluted earnings per share (1) $ 2.13     $ 1.68     $ 5.65     $ 4.85  
               
Basic shares outstanding   146,959       146,914       147,056       146,681  
Diluted shares outstanding   147,450       147,395       147,549       147,400  
 

(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)

  March 31,
2024
  June 30,
2023
Assets      
Current assets:      
Cash and cash equivalents $ 237,910     $ 227,891  
Accounts receivable, net   779,265       704,909  
Inventories   829,458       998,012  
Prepayments and other current assets   504,663       437,018  
Total current assets $ 2,351,296     $ 2,367,830  
Non-current assets:      
Property, plant, and equipment, net $ 539,743     $ 537,856  
Operating lease right-of-use assets   147,075       127,955  
Goodwill and other intangibles, net   3,337,017       3,322,640  
Deferred income taxes and other non-current assets   439,431       395,427  
Total non-current assets $ 4,463,266     $ 4,383,878  
Total assets $ 6,814,562     $ 6,751,708  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 177,445     $ 150,756  
Accrued expenses   356,076       365,660  
Operating lease liabilities, current   24,182       21,919  
Deferred revenue   150,753       138,072  
Income taxes payable   54,671       72,224  
Short-term debt   9,903       9,902  
Total current liabilities $ 773,030     $ 758,533  
Non-current liabilities:      
Deferred revenue $ 131,981     $ 119,186  
Deferred income taxes   86,564       90,650  
Operating lease liabilities, non-current   136,313       116,853  
Other long-term liabilities   47,550       68,166  
Long-term debt   997,047       1,431,234  
Long-term income taxes payable   12,157       37,183  
Total non-current liabilities $ 1,411,612     $ 1,863,272  
Total liabilities $ 2,184,642     $ 2,621,805  
Stockholders’ equity      
Common stock $ 588     $ 588  
Additional paid-in capital   1,847,938       1,772,083  
Retained earnings   4,769,963       4,253,016  
Treasury stock   (1,723,263 )     (1,623,256 )
Accumulated other comprehensive income   (265,306 )     (272,528 )
Total stockholders’ equity $ 4,629,920     $ 4,129,903  
Total liabilities and stockholders’ equity $ 6,814,562     $ 6,751,708  
 

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

  Three Months Ended   Nine Months Ended
  March 31,
2024
  March 31,
2023
  March 31,
2024
  March 31,
2023
Cash flows from operating activities:              
Net income $ 300,492     $ 232,500     $ 728,715     $ 667,892  
Adjustment to reconcile net income to cash provided by operating activities:              
Depreciation and amortization   43,474       44,356       133,192       118,396  
Amortization of right-of-use assets   11,168       8,434       28,262       23,967  
Stock-based compensation costs   20,442       17,832       58,792       51,215  
(Gain) loss attributable to equity method investments, net of dividends received   (440 )     183       2,716       5,037  
Gain on equity investments   (13,919 )     (6,418 )     (11,429 )     (11,506 )
Non-cash restructuring expenses               33,239        
Changes in operating assets and liabilities:              
Accounts receivable, net   (56,486 )     (12,629 )     (76,755 )     (88,452 )
Inventories, net   86,199       (21,974 )     163,294       (255,091 )
Prepaid expenses, net deferred income taxes and other current assets   (24,386 )     (19,961 )     (98,976 )     (86,607 )
Accounts payable, accrued expenses, income taxes payable and other   35,488       40,240       96       31,012  
Net cash provided by operating activities $ 402,032     $ 282,563     $ 961,146     $ 455,863  
Cash flows from investing activities:              
Purchases of property, plant, and equipment   (21,191 )     (28,817 )     (74,579 )     (85,223 )
Patent registration and acquisition costs   (1,918 )     (2,406 )     (13,954 )     (10,043 )
Business acquisitions, net of cash acquired   (3,080 )           (113,767 )     (1,011,225 )
Purchases of investments   (2,387 )     (12,597 )     (9,692 )     (29,729 )
Proceeds from exits of investments         3,937       250       3,937  
(Payments) / proceeds on maturity of foreign currency contracts   (4,577 )     11,780       (11,533 )     18,961  
Net cash used in investing activities $ (33,153 )   $ (28,103 )   $ (223,275 )   $ (1,113,322 )
Cash flows from financing activities:              
Proceeds from issuance of common stock, net   4,892       983       25,399       25,649  
Purchases of treasury stock   (50,000 )           (100,007 )      
Taxes paid related to net share settlement of equity awards   (314 )     (584 )     (8,336 )     (30,297 )
Payments of business combination contingent consideration         (316 )     (1,293 )     (316 )
Proceeds from borrowings, net of borrowing costs               105,000       1,070,000  
Repayment of borrowings   (220,000 )     (215,000 )     (535,000 )     (260,000 )
Dividends paid   (70,492 )     (64,640 )     (211,767 )     (193,571 )
Net cash (used in) / provided by financing activities $ (335,914 )   $ (279,557 )   $ (726,004 )   $ 611,465  
Effect of exchange rate changes on cash $ (5,302 )   $ (208 )   $ (1,848 )   $ 178  
Net increase / (decrease) in cash and cash equivalents   27,663       (25,305 )     10,019       (45,816 )
Cash and cash equivalents at beginning of period   210,247       253,199       227,891       273,710  
Cash and cash equivalents at end of period $ 237,910     $ 227,894     $ 237,910     $ 227,894  
 

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   Nine Months Ended
  March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023
               
Revenue $ 1,196,980     $ 1,116,898     $ 3,462,102     $ 3,100,936  
               
GAAP cost of sales $ 504,199     $ 499,146     $ 1,522,326     $ 1,362,661  
Less: Amortization of acquired intangibles (A)   (7,812 )     (8,322 )     (24,976 )     (22,001 )
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 $ 496,387     $ 490,824     $ 1,483,088     $ 1,340,660  
               
GAAP gross profit $ 692,781     $ 617,752     $ 1,939,776     $ 1,738,275  
GAAP gross margin   57.9 %     55.3 %     56.0 %     56.1 %
Non-GAAP gross profit $ 700,593     $ 626,074     $ 1,979,014     $ 1,760,276  
Non-GAAP gross margin   58.5 %     56.1 %     57.2 %     56.8 %
 

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

  Three Months Ended   Nine Months Ended
  March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023
               
GAAP income from operations $ 374,584   $ 300,671   $ 938,677   $ 856,602
Amortization of acquired intangibles—cost of sales (A)   7,812     8,322     24,976     22,001
Amortization of acquired intangibles—operating expenses (A)   11,204     12,188     35,259     29,701
Restructuring (A)           64,228    
Masks with magnets field safety notification expenses (A)           6,351    
Astral field safety notification expenses (A)           7,911    
Acquisition-related expenses (A)           483     9,157
Non-GAAP income from operations $ 393,600   $ 321,181   $ 1,077,885   $ 917,461
 

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   Nine Months Ended
  March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023
               
GAAP net income $ 300,492     $ 232,500     $ 728,715     $ 667,892  
Amortization of acquired intangibles—cost of sales (A)   7,812       8,322       24,976       22,001  
Amortization of acquired intangibles—operating expenses (A)   11,204       12,188       35,259       29,701  
Restructuring expenses (A)               64,228        
Masks with magnets field safety notification expenses (A)               6,351        
Astral field safety notification expenses (A)               7,911        
Acquisition-related expenses (A)               483       9,157  
Income tax effect on non-GAAP adjustments (A)   (5,083 )     (5,213 )     (34,969 )     (14,484 )
Non-GAAP net income (A) $ 314,425     $ 247,797     $ 832,954     $ 714,267  
               
GAAP diluted shares outstanding   147,450       147,395       147,549       147,400  
GAAP diluted earnings per share $ 2.04     $ 1.58     $ 4.94     $ 4.53  
Non-GAAP diluted earnings per share (A) $ 2.13     $ 1.68     $ 5.65     $ 4.85  
 

(A) ResMed adjusts for the impact of the amortization of acquired intangibles, restructuring expenses, field safety notification expenses, acquisition-related expenses, 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
  March 31,
2024
(A) March 31,
2023
(A) % Change   Constant
Currency (B)
U.S., Canada, and Latin America              
Devices $ 399.3   $ 372.1   7 %    
Masks and other   288.2     257.1   12      
Total U.S., Canada and Latin America $ 687.5   $ 629.1   9      
               
Combined Europe, Asia, and other markets              
Devices $ 238.9   $ 235.8   1 %   1 %
Masks and other   122.6     115.2   6     6  
Total Combined Europe, Asia and other markets $ 361.6   $ 351.0   3     3  
               
Global revenue              
Total Devices $ 638.2   $ 607.9   5 %   5 %
Total Masks and other   410.8     372.2   10     10  
Total Sleep and Respiratory Care $ 1,049.0   $ 980.1   7     7  
               
Software-as-a-Service   148.0     136.8   8     8  
Total $ 1,197.0   $ 1,116.9   7     7  
               

  Nine Months Ended
  March 31,
2024
(A) March 31,
2023
(A) %
Change
  Constant
Currency (B)
U.S., Canada, and Latin America              
Devices $ 1,116.5   $ 1,057.1   6 %    
Masks and other   878.6     765.4   15      
Total U.S., Canada and Latin America $ 1,995.2   $ 1,822.5   9      
               
Combined Europe, Asia, and other markets              
Devices $ 692.4   $ 611.1   13 %   11 %
Masks and other   342.3     307.9   11     8  
Total Combined Europe, Asia and other markets $ 1,034.8   $ 919.0   13     10  
               
Global revenue              
Total Devices $ 1,808.9   $ 1,668.3   8 %   8 %
Total Masks and other   1,221.0     1,073.3   14     13  
Total Sleep and Respiratory Care $ 3,029.9   $ 2,741.5   11     10  
               
Software-as-a-Service   432.2     359.4   20     20  
Total $ 3,462.1   $ 3,100.9   12     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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