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.