SAN DIEGO, July 28, 2016 /PRNewswire/ -- ResMed Inc.
(NYSE: RMD) today announced results for its quarter ended
June 30, 2016. Revenue for the
quarter was $518.6 million, a 14
percent increase compared to the same period of the prior year, or
a 15 percent increase on a constant currency basis. Excluding the
contribution from the Brightree acquisition, revenue for the
quarter was $489.7 million, an 8
percent increase.
"We finished the year with double-digit constant currency
revenue growth, fueled by solid performance in masks, devices, and
our first quarter of software-as-a-service revenue from Brightree.
Our board of directors has declared a 10 percent increase in our
dividend this quarter, reflecting confidence in our long-term
strategy and outlook," said Mick
Farrell, ResMed's chief executive officer.
"We are the world's largest provider of remote connected care
solutions with over 2 million patients using ResMed cloud-connected
devices on bedside tables; we provide actionable information every
day for patients, physicians, providers and payors. During the
year, we continued to demonstrate the value of our solutions
through clinical research, while transforming how healthcare is
delivered through cloud-based offerings that are shaping a new
frontier in connected care."
Farrell concluded, "Our global team ended fiscal year 2016 with
$1.8 billion in revenue as we
continue to drive towards our goal of changing 20 million lives by
2020. ResMed is on a trajectory to be the world's leading
tech-driven medical device company; we deliver innovative
cloud-connected products and solutions that improve patient
outcomes, create efficiencies for our customers, help physicians
and providers better manage chronic disease, and lower overall
healthcare system costs."
Analysis of fourth quarter results
Fourth
quarter revenue in the Americas was $324.5
million, a 19 percent increase over the same period of the
prior year. This included Brightree revenue of $28.9 million. Excluding Brightree, revenue
in the Americas was $295.6 million,
an 8 percent increase over the prior year. Revenue in combined EMEA
and APAC was $194.1 million, an
increase of 8 percent on a constant currency basis compared to the
same period of the prior year.
Gross margin in the fourth quarter was 58.1 percent.
Non-GAAP gross margin in the fourth quarter was 58.2 percent.
This excludes a one-time purchase accounting adjustment of
$2.3 million associated with
Brightree's deferred revenue, partially offset by a benefit
relating to the release of $0.4
million in accrued expenses associated with the SERVE-HF
field safety notice. Gross margin for the quarter was lower
compared with the same period last year, mainly due to declines in
average selling prices and changes in product mix largely offset by
manufacturing and procurement efficiencies and an incremental
contribution from the Brightree acquisition.
Income from operations for the quarter was $118.6 million, a 19 percent increase compared
with the quarter ended June 30, 2015.
Non-GAAP income from operations for the quarter was $135.1 million, a 20 percent increase compared to
the same period of the prior year.
Selling, general and administrative expenses were $133.9 million, a 9 percent increase over the
same period in the prior year, or a 10 percent increase on a
constant currency basis. SG&A expenses improved to 25.8 percent
of revenue in the quarter, compared with 27.2 percent reported in
the quarter ending June 30,
2015.
Research and development expenses were $34.4 million, or 6.6 percent of revenue. R&D
expenses increased by 21 percent compared with the same period last
year, or a 24 percent increase on a constant currency basis.
Amortization of acquired intangible assets was $12.6 million during the quarter, an increase of
$10.5 million compared with the same
period last year. The increase in amortization of acquired
intangible assets was primarily due to the amortization expense
associated with our recent acquisitions, in particular Brightree,
Curative and Inova. Stock-based compensation costs incurred
during the quarter of $11.6 million
consisted of expenses associated with employee equity grants, and
our employee stock purchase plan.
Net income for the quarter was $83.1
million, a 5 percent decrease compared to the same period of
the prior year. Non-GAAP net income was $104.4 million, an 8 percent increase compared to
the prior year. Non-GAAP measures adjust for amortization of
acquired intangibles, the one-time deferred revenue fair value
adjustment, acquisition and integration related expenses associated
with our acquisitions of Inova and Brightree, the SERVE-HF accrual
release and the cumulative income tax benefit associated with the
adoption of ASU 2016-09. GAAP diluted earnings per share for
the quarter decreased 3 percent to $0.59. Non-GAAP diluted earnings per share
increased 9 percent to $0.74.
Cash flow from operations for the quarter was $143.0 million compared to net income in the
current quarter of $83.1 million.
Impact to income tax expense with the adoption of ASU
2016-09
During the quarter we adopted ASU 2016-09
"Improvements to Employee Share-Based Payment Accounting", and in
accordance with this standard we recognized additional income tax
benefits of $1.3 million and
$11.2 million in the quarter and year
ended June 30, 2016, respectively.
This benefit would have previously been recorded as a
reduction to Additional Capital. Under the new standard, we
are required to report the impact as though the standard had been
adopted on July 1, 2015, the
beginning of our fiscal year. As such, the full year income
tax impact includes the fourth quarter fiscal year 2016 tax benefit
of $1.3 million and the
reclassification of $9.9 million
originally recognized in Additional Capital during the nine months
ended March 31, 2016. For our
fourth quarter non-GAAP tax expense we have reflected the full year
tax benefit of $11.2 million.
The income tax benefit associated with the adoption of ASU 2016-09
was predominantly offset by an additional tax expense recognized in
our fourth quarter associated with an increase in our foreign cash
repatriation to the United States.
Analysis of fiscal year 2016 results
Revenue
for the year increased 10 percent over the prior year to
$1.8 billion, or a 13 percent
increase on a constant currency basis.
Income from operations for the year was $429.0 million, a 5 percent increase over the
prior year. Non-GAAP income from operations for the year was
$464.8 million, an 8 percent increase
compared to the prior year. Non-GAAP measures exclude
amortization of acquired intangibles, the one-time deferred revenue
fair value adjustment, acquisition and integration related
expenses, the SERVE-HF accrual, restructuring expenses and
donations.
Net income for the year was $352.4
million, consistent with the same period in the prior
year. Non-GAAP net income was $379.4
million, a 3 percent increase compared to the prior year.
Diluted earnings per share increased 1 percent to
$2.49. Non-GAAP diluted earnings per
share for the year was $2.68, a 4
percent increase compared with the prior year.
Cash flow from operations for the year was $547.9 million. During the year we paid
$168.1 million in dividends and
repurchased $102.1 million of shares
under our share repurchase program. During the year we
completed acquisitions for a total net cash consideration of
$1.0 billion.
Share repurchase program
As previously
announced, we have temporarily suspended our share repurchase
program due to recent acquisitions. We did not repurchase any
shares during the fourth quarter, however we may, at any time,
elect to reinitiate the share repurchase program.
Dividend program
The ResMed board of directors
today declared a quarterly dividend of $0.33 per share, a 10 percent increase from the
previous dividend. The dividend will have a record date of
August 18, 2016, payable on
September 22, 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
August 16, 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 August 16, 2016 through
August 18, 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 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 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 45507665. The telephone
replay will be available until August 11,
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 5,000 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:
|
News
Media:
|
Agnes Lee
|
Alison
Graves
|
Senior Director,
Investor Relations
|
Director, Global
Corporate Communications
|
(858)
836-5971
|
(858)
836-6789
|
investorrelations@resmed.com
|
news@resmed.com
|
RESMED INC AND
SUBSIDIARIES
|
Condensed
Consolidated Statements of Income (Unaudited)
|
(In thousands, except
per share data)
|
|
Three Months
Ended
June 30,
|
Twelve Months
Ended
June 30,
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Net
revenue
|
$518,647
|
$453,064
|
$1,838,713
|
$1,678,912
|
Cost of
sales
|
217,560
|
188,605
|
775,020
|
662,487
|
SERVE-HF field safety
notice expenses (1)
|
(402)
|
5,029
|
(2,804)
|
5,029
|
Gross
profit
|
301,489
|
259,430
|
1,066,497
|
1,011,396
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling, general and
administrative
|
133,929
|
123,250
|
482,593
|
472,627
|
Research and
development
|
34,380
|
28,523
|
118,651
|
114,865
|
Restructuring
expenses (1)
|
-
|
-
|
6,914
|
-
|
Acquisition and
integration expenses (1)
|
1,914
|
-
|
5,464
|
-
|
Donations
(1)
|
-
|
6,000
|
-
|
6,000
|
Amortization of
acquired intangible assets
|
12,629
|
2,110
|
23,923
|
8,668
|
Total operating
expenses
|
182,852
|
159,883
|
637,545
|
602,160
|
Income from
operations (1)
|
118,637
|
99,547
|
428,952
|
409,236
|
|
|
|
|
|
Other income
(expenses), net:
|
|
|
|
|
Interest income
(expense), net
|
(2,374)
|
4,666
|
5,654
|
20,430
|
Other, net
|
1,168
|
(97)
|
4,959
|
6,250
|
Total other income
(expenses), net
|
(1,206)
|
4,569
|
10,613
|
26,680
|
|
|
|
|
|
Income before income
taxes
|
117,431
|
104,116
|
439,565
|
435,916
|
Income
taxes
|
34,305
|
16,654
|
87,157
|
83,030
|
Net income
(1)
|
$83,126
|
$87,462
|
$352,408
|
$352,886
|
|
|
|
|
|
Basic earnings per
share
|
$0.59
|
$0.62
|
$2.51
|
$2.51
|
Diluted earnings per
share (1)
|
$0.59
|
$0.61
|
$2.49
|
$2.47
|
Non-GAAP diluted
earnings per share (1)
|
$0.74
|
$0.68
|
$2.68
|
$2.57
|
|
|
|
|
|
Basic shares
outstanding
|
140,551
|
140,819
|
140,242
|
140,468
|
Diluted shares
outstanding
|
141,654
|
142,702
|
141,669
|
142,687
|
|
|
|
|
|
|
|
(1)
|
See the
reconciliation of non-GAAP financial measures in the table at the
end of the press release.
|
RESMED INC AND
SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets (Unaudited - In thousands)
|
|
June 30,
|
June 30,
|
|
2016
|
2015
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$731,434
|
$717,249
|
Accounts receivable,
net
|
382,086
|
362,568
|
Inventories
|
224,456
|
246,859
|
Prepayments and other
current assets
|
81,743
|
81,168
|
Total current
assets
|
1,419,719
|
1,407,844
|
Property, plant and
equipment, net
|
384,276
|
387,758
|
Goodwill
|
1,059,245
|
264,261
|
Other intangibles,
net
|
299,808
|
47,142
|
Deferred income taxes
and other non-current assets
|
95,887
|
74,769
|
Total non-current
assets
|
1,839,216
|
773,930
|
Total
assets
|
$3,258,935
|
$2,181,774
|
Liabilities and
Stockholders' Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$92,571
|
$81,112
|
Accrued
expenses
|
156,805
|
132,976
|
Deferred
revenue
|
50,009
|
36,097
|
Income taxes
payable
|
39,166
|
16,278
|
Short-term
debt
|
300,000
|
-
|
Total current
liabilities
|
638,551
|
266,463
|
Non-current
liabilities:
|
|
|
Deferred income
taxes
|
9,061
|
6,372
|
Deferred
revenue
|
40,281
|
19,284
|
Income taxes
payable
|
-
|
1,754
|
Other long term
liabilities
|
1,211
|
-
|
Long-term
debt
|
875,000
|
300,594
|
Total non-current
liabilities
|
925,553
|
328,004
|
Total
liabilities
|
1,564,104
|
594,467
|
Stockholders'
Equity:
|
|
|
Common
stock
|
563
|
562
|
Additional paid-in
capital
|
1,303,238
|
1,228,795
|
Retained
earnings
|
2,160,299
|
1,976,020
|
Treasury
stock
|
(1,546,611)
|
(1,444,554)
|
Accumulated other
comprehensive income
|
(222,658)
|
(173,516)
|
Total stockholders'
equity
|
$1,694,831
|
$1,587,307
|
|
|
|
Total liabilities and
stockholders' equity
|
$3,258,935
|
$2,181,774
|
|
|
|
RESMED INC AND
SUBSIDIARIES
|
Condensed
Consolidated Statements of Cash Flows (Unaudited - In
thousands)
|
|
Twelve Months
Ended June 30,
|
|
2016
|
2015
|
Cash flows from
operating activities:
|
|
|
Net income
|
$352,408
|
$352,886
|
Adjustment to
reconcile net income to cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
86,849
|
73,056
|
Impairment of
long-lived asset
|
2,815
|
-
|
Gain on disposal of
business
|
-
|
(709)
|
Stock-based
compensation costs
|
46,408
|
47,855
|
Excess tax benefit
from stock-based compensation arrangements
(A)
|
-
|
(24,959)
|
Impairment of cost
method investment
|
750
|
-
|
Changes in fair value
of business combination contingent consideration
|
(2,986)
|
|
Changes in operating
assets and liabilities, net of effect of acquisitions:
|
|
|
Accounts receivable,
net
|
(27,307)
|
(28,259)
|
Inventories,
net
|
30,492
|
(99,524)
|
Prepaid expenses, net
deferred income taxes and other current assets
|
12,121
|
(22,849)
|
Accounts payable,
accrued expenses and other liabilities
|
46,382
|
85,683
|
Net cash provided by
operating activities
|
547,932
|
383,180
|
Cash flows from
investing activities:
|
|
|
Purchases of
property, plant and equipment
|
(58,534)
|
(62,502)
|
Patent registration
costs
|
(9,295)
|
(9,442)
|
Business
acquisitions, net of cash acquired
|
(1,041,864)
|
(29,407)
|
Investments in
cost-method investments
|
(8,965)
|
(10,750)
|
Proceeds from sale of
business
|
468
|
937
|
Purchases of foreign
currency contracts
|
-
|
(700)
|
Payments on maturity
of foreign currency contracts
|
(7,564)
|
(31,207)
|
Net cash used in
investing activities
|
(1,125,754)
|
(143,071)
|
Cash flows from
financing activities:
|
|
|
Proceeds from
issuance of common stock, net
|
27,694
|
38,806
|
Excess tax benefit
from stock-based compensation arrangements
(A)
|
-
|
24,959
|
Purchases of treasury
stock
|
(102,058)
|
(160,300)
|
Payment of business
combination contingent consideration
|
(1,228)
|
(458)
|
Proceeds from
borrowings, net of borrowing costs
|
1,140,000
|
160,000
|
Repayment of
borrowings
|
(283,694)
|
(161,536)
|
Dividends
paid
|
(168,130)
|
(157,262)
|
Net cash (used in) /
provided by financing activities
|
612,584
|
(255,791)
|
Effect of exchange
rate changes on cash
|
(20,577)
|
(172,799)
|
Net increase /
(decrease) in cash and cash equivalents
|
14,185
|
(188,481)
|
Cash and cash
equivalents at beginning of period
|
717,249
|
905,730
|
Cash and cash
equivalents at end of period
|
$731,434
|
$717,249
|
|
|
(A)
|
During the quarter we
adopted ASU 2016-09 "Improvements to Employee Share-Based Payment
Accounting", which included a requirement to reclassify the excess
tax benefits from stock-based compensation arrangements from
financing activities to operating activities. This
reclassification increased the cash flow from operating activities
for the quarter and year ended June 30, 2016, by $1 million and $14
million, respectively.
|
Reconciliation of
Non-GAAP Financial Measures (Unaudited)
|
(In US$ 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 June 30
|
Twelve Months
Ended June 30,
|
|
2016
|
2015
|
2016
|
2015
|
GAAP income from
operations
|
$118,637
|
$99,547
|
$428,952
|
$409,236
|
Deferred revenue fair
value adjustment (A)
|
2,332
|
-
|
2,332
|
-
|
SERVE-HF accrual
(release) (A)
|
(402)
|
5,029
|
(2,804)
|
5,029
|
Restructuring
expenses (A)
|
-
|
-
|
6,914
|
-
|
Acquisition and
integration expenses (A)
|
1,914
|
-
|
5,464
|
-
|
Donations
(A)
|
-
|
6,000
|
-
|
6,000
|
Amortization of
acquired intangible assets (A)
|
12,629
|
2,110
|
23,923
|
8,668
|
Non-GAAP income from
operations
|
$135,110
|
$112,686
|
$464,781
|
$428,933
|
|
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 June 30,
|
Twelve Months
Ended June 30,
|
|
2016
|
2015
|
2016
|
2015
|
GAAP net
income
|
$83,126
|
$87,462
|
$352,408
|
$352,886
|
Deferred revenue fair
value adjustment (A)
|
1,478
|
-
|
1,478
|
-
|
SERVE-HF accrual
(release), net of tax (A)
|
(281)
|
3,521
|
(1,963)
|
3,521
|
Restructuring
expenses, net of tax (A)
|
-
|
-
|
5,204
|
-
|
Acquisition and
integration expenses, net of tax (A)
|
1,393
|
-
|
4,943
|
-
|
Donations, net of tax
(A)
|
-
|
3,796
|
-
|
3,796
|
Amortization of
acquired intangible assets, net of tax
(A)
|
8,794
|
1,600
|
17,366
|
6,551
|
Cumulative ASU
2016-09 income tax benefit not reflected in the quarter ended June
30, 2016 (A)
|
9,905
|
-
|
-
|
-
|
Non-GAAP net income
(A)
|
$104,415
|
$96,379
|
$379,436
|
$366,754
|
Diluted shares
outstanding
|
141,654
|
142,702
|
141,669
|
142,687
|
GAAP diluted earnings
per share
|
$0.59
|
$0.61
|
$2.49
|
$2.47
|
Non-GAAP diluted
earnings per share (A)
|
$0.74
|
$0.68
|
$2.68
|
$2.57
|
|
|
(A)
|
ResMed adjusts for
the impact of the deferred revenue fair value adjustment, movements
in the SERVE-HF accrual, restructuring expenses, acquisition and
integration related expenses, donations, amortization of acquired
intangible assets and the cumulative income tax benefit associated
with the adoption of ASU 2016-09 from their evaluation of ongoing
operations and believes 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 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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SOURCE ResMed Inc.