SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT

Under Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

January 21, 2016

ResMed Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

                                     

 

  

001-15317

                                     

 

  

98-0152841

                                     

 

(State or Other Jurisdiction of

Incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

9001 Spectrum Center Blvd.

San Diego, California 92123

(Address of Principal Executive Offices)

 

 

(858) 836-5000

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02. Disclosure of Results of Operations and Financial Condition.

On January 21, 2016 we issued the press release attached as Exhibit 99.1. It is incorporated into this report by reference. The press release describes the results of our operations for the quarter ended December 31, 2015.

Item 8.01. Other Events.

On January 21, 2016, we announced that our board of directors declared a quarterly cash dividend of US $0.30 per share of outstanding common stock. The dividend will be payable on March 17, 2016, with a record date of February 11, 2016. We will pay the dividend in US currency to holders of our common stock trading on the New York Stock Exchange (NYSE). We will pay the dividend to holders of CHESS Depositary Instruments (CDIs) trading on the Australian Securities Exchange (ASX) at an equivalent amount in Australian currency, based on the exchange rate on February 11, 2016, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be February 9, 2016 for CDI holders and common stock holders. ResMed has received a waiver from the ASX’s settlement operating rules, which will allow us to defer processing conversions between its common stock and CDI registers from February 10, 2016 through February 11, 2016, inclusive.

Item 9.01. Financial Statements and Exhibits.

 

  (d)

Exhibits

 

Exhibits:

  

Description of Document

99.1

  

Press Release dated January 21, 2016 regarding results of operations

 

2


SIGNATURES

We have authorized the person whose signature appears below to sign this report on our behalf, in accordance with the Securities Exchange Act of 1934.

 

Date: January 21, 2016

    RESMED INC.
   

(registrant)

   

By:

 

/s/ Brett Sandercock

   

Name: Brett Sandercock

   

Its: Chief Financial Officer

 

3


EXHIBIT INDEX

 

Exhibits:

  

Description of Document

99.1

  

Press Release dated January 21, 2016 regarding results of operations



Exhibit 99.1

 

LOGO

ResMed Inc. Announces Results for the Second Quarter of Fiscal Year 2016

Revenue increased 7% to $454.5 million; up 13% on a constant currency basis

GAAP diluted earnings per share of $0.64; non-GAAP diluted earnings per share of $0.69

Operating cash flow of $147.4 million in the second quarter

Company repurchased 700,000 shares in the second quarter

San Diego, January 21, 2016 – ResMed Inc. (NYSE: RMD) today announced results for its quarter ended December 31, 2015. Revenue for the quarter was $454.5 million, a 7 percent increase compared with the quarter ended December 31, 2014; this is a 13 percent increase on a constant currency basis.

“We remain focused on delivering strong long-term growth from our sleep-disordered breathing and respiratory care businesses. Our team continued to deliver double-digit constant currency growth this quarter,” said Mick Farrell, ResMed’s chief executive officer. “Our Americas region was a significant contributor this quarter, as our customers continued to show their strong preference for our offerings, including Air Solutions cloud-based software, AirSense devices, and AirFit patient interface systems.

“We have expanded our respiratory care business into the field of long-term oxygen therapy. Last week we announced a definitive agreement to acquire Inova Labs in Austin, Texas. This will add portable oxygen concentrators, complementing our non-invasive ventilators, and providing yet another ResMed therapy option for patients with chronic obstructive pulmonary disease, or COPD.”

Farrell continued, “In the 15 months since we launched our Air Solutions platform, ResMed has transformed into a tech-driven medical device company. As the global leader of connected care for medical devices, we are liberating healthcare data, improving outcomes, and unlocking value by providing actionable information for patients, physicians, providers and payors, literally every morning.”

Analysis of second quarter results

In the second quarter of fiscal year 2016, revenue in the Americas was $269.5 million, a 17 percent increase over the prior year’s quarter. Revenue in combined EMEA and APAC was $185.0 million, a 4 percent decrease compared with the quarter ended December 31, 2014; this is a 7 percent increase on a constant currency basis.

Gross margin in the second quarter was 58.6 percent, but this included a one-time benefit relating to the release of $2.4 million in accrued expenses associated with the SERVE-HF field safety notice. Excluding this benefit, gross margin for Q2 FY16 was 58.1 percent; this is lower than the prior year’s quarter, mainly due to declines in average selling prices and an unfavorable geographic and product mix.

Income from operations for the quarter was $108.0 million, a 1 percent decrease compared with the quarter ended December 31, 2014. Non-GAAP income from operations for the quarter was $116.9 million, a 5 percent increase compared with the quarter ended December 31, 2014.

Selling, general and administrative expenses were $118.2 million for the second quarter of fiscal year 2016, a 4 percent decrease over the quarter ended December 31, 2014; this is a 4 percent increase on a constant currency basis. SG&A expenses improved to 26.0 percent of revenue in the quarter, compared with 29.0 percent in the quarter ended December 31, 2014.


Research and development expenses were $29.0 million for the second quarter of fiscal year 2016, or 6.4 percent of revenue. R&D expenses decreased by 1 percent compared with the quarter ended December 31, 2014; this is a 14 percent increase on a constant currency basis.

Amortization of acquired intangible assets was $4.4 million during the quarter. Stock-based compensation costs incurred during the quarter of $11.5 million consisted of expenses associated with employee equity grants, and the company’s employee stock purchase plan.

Net income for the quarter was $90.5 million, a 1 percent decrease compared with the quarter ended December 31, 2014. Non-GAAP net income for the quarter ended December 31, 2015 was $97.5 million, a 5 percent increase compared with the quarter ended December 31, 2014 (non-GAAP measures exclude the SERVE-HF accrual release, amortization of acquired intangibles, and $5.2 million in net restructuring expenses associated with rationalizing our European facilities).

GAAP diluted earnings per share for the quarter were $0.64.

Non-GAAP diluted earnings per share for the quarter were $0.69.

Cash flow from operations for the quarter was $147.4 million.

Share repurchase program

During the quarter, the company repurchased 700,000 shares at a cost of $40.1 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. The dividend will have a record date of February 11, 2016, payable on March 17, 2016. 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 February 9, 2016 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 February 10, 2016 through February 11, 2016 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 “Q2 2016 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 4360562. The telephone replay will be available until February 4, 2016.

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 and the integration of acquisitions—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

 

- More -


RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

     

Three Months Ended

December 31,

 

    

Six Months Ended

December 31,

 

 
      2015     2014      2015     2014  
   

Net revenue

     $454,540        $422,952         $866,187        $803,351   

Cost of sales

     190,433        159,730         363,461        302,816   

SERVE-HF accrual release(1)

 

    

 

(2,402

 

 

   

 

-

 

  

 

    

 

(2,402

 

 

   

 

-

 

  

 

 

Gross profit

 

    

 

266,509

 

  

 

   

 

263,222

 

  

 

    

 

505,128

 

  

 

   

 

500,535

 

  

 

   

Operating expenses:

           

Selling, general and administrative

     118,219        122,520         229,314        233,041   

Research and development

     28,970        29,294         56,162        59,318   

Restructuring expenses(1)

     6,914        -         6,914        -   

Amortization of acquired intangible assets(1)

     4,429        2,262         6,736        4,355   

 

Total operating expenses

 

    

 

158,532

 

  

 

   

 

154,076

 

  

 

    

 

299,126

 

  

 

   

 

296,714

 

  

 

 

Income from operations(1)

 

    

 

107,977

 

  

 

   

 

109,146

 

  

 

    

 

206,002

 

  

 

   

 

203,821

 

  

 

   

Other income (expenses), net:

           

Interest income (expense), net

     2,476        5,418         5,898        11,003   

Other, net

 

    

 

3,242

 

  

 

   

 

947

 

  

 

    

 

1,239

 

  

 

   

 

2,617

 

  

 

 

Total other income (expenses), net

 

    

 

5,718

 

  

 

   

 

6,365

 

  

 

    

 

7,137

 

  

 

   

 

13,620

 

  

 

   

Income before income taxes

     113,695        115,511         213,139        217,441   

Income taxes

 

    

 

23,178

 

  

 

   

 

24,330

 

  

 

    

 

42,220

 

  

 

   

 

43,001

 

  

 

 

Net income(1)

 

    

 

$90,517

 

  

 

   

 

$91,181

 

  

 

    

 

$170,919

 

  

 

   

 

$174,440

 

  

 

   

Basic earnings per share

     $0.65        $0.65         $1.22        $1.25   

Diluted earnings per share

     $0.64        $0.64         $1.21        $1.22   

Non-GAAP diluted earnings per share(1)

     $0.69        $0.65         $1.27        $1.25   
   

Basic shares outstanding

     139,926        140,048         140,118        140,104   

Diluted shares outstanding

     141,148        142,202         141,532        142,468   

 

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

 

- More -


RESMED INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited - In thousands)

 

      December 31,
2015
   

June 30,

2015

 

ASSETS

        

Current assets:

        

Cash and cash equivalents

     $658,804        $717,249   

Accounts receivable, net

     331,747        362,568   

Inventories

     237,463        246,859   

Prepayments, deferred income taxes and other current assets

     122,827        117,506   

 

Total current assets

 

    

 

1,350,841

 

  

 

   

 

1,444,182

 

  

 

Property, plant and equipment, net

     375,224        387,758   

Goodwill and other intangible assets, net

     466,418        311,403   

Deferred income taxes and other non-current assets

     46,528        40,917   

 

Total non-current assets

 

    

 

888,170

 

  

 

   

 

740,078

 

  

 

 

Total assets

 

    

 

$2,239,011

 

  

 

   

 

$2,184,260

 

  

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

        

Current liabilities:

        

Accounts payable

     $67,580        $81,112   

Accrued expenses

     147,662        132,976   

Deferred revenue

     36,101        36,097   

Income taxes payable

     12,427        16,278   

Deferred income taxes

     815        796   

Short-term debt

     985        -   

 

Total current liabilities

 

    

 

265,570

 

  

 

   

 

267,259

 

  

 

Non-current liabilities:

        

Deferred income taxes

     15,665        8,062   

Deferred revenue

     28,928        19,284   

Income taxes payable

     1,754        1,754   

Other long term liabilities

     2,232        -   

Long-term debt

     400,591        300,594   

 

Total non-current liabilities

 

    

 

449,170

 

  

 

   

 

329,694

 

  

 

 

Total liabilities

 

    

 

714,740

 

  

 

   

 

596,953

 

  

 

STOCKHOLDERS’ EQUITY:

        

Common stock

     560        562   

Additional paid-in capital

     1,268,374        1,228,795   

Retained earnings

     2,062,885        1,976,020   

Treasury stock

     (1,546,611     (1,444,554

Accumulated other comprehensive income

    

 

(260,937

 

 

   

 

(173,516

 

 

 

 

Total stockholders’ equity

 

    

 

$1,524,271

 

  

 

   

 

$1,587,307

 

  

 

 

Total liabilities and stockholders’ equity

 

    

 

$2,239,011

 

  

 

   

 

$2,184,260

 

  

 

 

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RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited - In thousands)

     

Six Months

Ended

December 31,

 
       2015        2014   

Cash flows from operating activities:

        

Net income

     $170,919        $174,440   

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

        

Depreciation and amortization

     39,920        37,451   

Impairment of long-lived asset

     2,815        -   

Changes in fair value of business combination contingent consideration

     (105     (132

Gain on disposal of business

     -        (709

Stock-based compensation costs

     23,841        23,084   

Excess tax benefit from stock-based compensation arrangements

     (10,710     (10,889

Impairment of cost method investment

     750        -   

Changes in operating assets and liabilities, net of effect of acquisitions:

        

Accounts receivable, net

     24,533        11,067   

Inventories, net

     8,751        (64,406

Prepaid expenses, net deferred income taxes and other current assets

     14,398        (4,309

Accounts payable, accrued expenses and other liabilities

     (5,600     26,941   

 

Net cash provided by operating activities

 

    

 

269,512

 

  

 

   

 

192,538

 

  

 

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (30,934     (39,675

Patent registration costs

     (4,902     (4,810

Business acquisitions, net of cash acquired

     (152,118     (17,781

Investments in cost-method investments

     (7,582     (10,500

Proceeds from sale of business

     -        468   

Payments on maturity of foreign currency contracts

     (28,326     (28,300

 

Net cash used in investing activities

 

    

 

(223,862

 

 

   

 

(100,598

 

 

Cash flows from financing activities:

        

Proceeds from issuance of common stock, net

     8,066        9,931   

Excess tax benefit from stock-based compensation arrangements

     10,710        10,889   

Purchases of treasury stock

     (102,058     (84,055

Payment of business combination contingent consideration

     (1,120     (458

Proceeds from borrowings, net of borrowing costs

     200,000        149,000   

Repayment of borrowings

     (100,160     (19

Dividends paid

     (84,054     (78,477

 

Net cash (used in) / provided by financing activities

 

    

 

(68,616

 

 

   

 

6,811

 

  

 

 

Effect of exchange rate changes on cash

 

    

 

(35,479

 

 

   

 

(123,786

 

 

 

Net increase / (decrease) in cash and cash equivalents

 

     (58,445     (25,035

Cash and cash equivalents at beginning of period

 

    

 

717,249

 

  

 

   

 

905,730

 

  

 

 

Cash and cash equivalents at end of period

 

    

 

658,804

 

  

 

   

 

880,695

 

  

 

 

- More –


Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In US$ thousands, except share and per share data)

 

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

 

     

Three Months Ended

December 31,

    

Six Months Ended

December 31,

 
       2015        2014         2015        2014   

GAAP income from operations

 

     $107,977        $109,146         $206,002        $203,821   

SERVE-HF accrual release (A)

 

     (2,402     -         (2,402     -   

Restructuring expenses (A)

 

     6,914        -         6,914        -   

Amortization of acquired intangible assets (A)

 

    

 

4,429

 

  

 

   

 

2,262

 

  

 

    

 

6,736

 

  

 

   

 

4,355

 

  

 

 

Non-GAAP income from operations (excluding the impact of SERVE-HF accrual release, restructuring expenses and amortization of acquired intangible assets)

 

    

 

$116,918

 

  

 

   

 

$111,408

 

  

 

    

 

$217,250

 

  

 

   

 

$208,176

 

  

 

 

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

December 31,

    

Six Months Ended

December 31,

 
       2015        2014         2015        2014   

 

GAAP net income

     $90,517        $91,181         $170,919        $174,440   

 

SERVE-HF accrual release, net of tax (A)

     (1,682     -         (1,682     -   

 

Restructuring expenses, net of tax (A)

     5,204        -         5,204        -   

 

Amortization of acquired intangible assets, net of tax (A)

 

    

 

3,439

 

  

 

   

 

1,707

 

  

 

    

 

5,156

 

  

 

   

 

3,308

 

  

 

 

Non-GAAP net income (A)

 

    

 

$97,478

 

  

 

   

 

$92,888

 

  

 

    

 

$179,597

 

  

 

   

 

$177,748

 

  

 

 

Diluted shares outstanding

 

    

 

141,148

 

  

 

   

 

142,202

 

  

 

    

 

141,532

 

  

 

   

 

142,468

 

  

 

 

GAAP diluted earnings per share

 

    

 

$0.64

 

  

 

   

 

$0.64

 

  

 

    

 

$1.21

 

  

 

   

 

$1.22

 

  

 

 

Non-GAAP diluted earnings per share (A)

 

    

 

$0.69

 

  

 

   

 

$0.65

 

  

 

    

 

$1.27

 

  

 

   

 

$1.25

 

  

 

 

(A)  ResMed excludes the impact of release of SERVE-HF accrual, 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 the SERVE-HF accrual release, restructuring expenses and 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.

 

- End -

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