Resmed inc. announces results for the second quarter of fiscal year 2021
San diego--(business wire)--resmed inc. (nyse: rmd, asx: rmd), a world-leading digital health company, today announced results for its quarter ended december 31, 2020. second quarter 2021 highlights all comparisons are to the prior year period revenue increased 9% to $800.0 million; up 7% on a constant currency basis gaap gross margin of 57.8%; non-gaap gross margin expanded 20 bps to 59.9% net operating profit increased 12%; non-gaap operating profit up 16% gaap diluted earnings per share of $1.23; non-gaap diluted earnings per share of $1.41 “our second-quarter results reflect continued solid performance and positive trends across our business resulting in top-line growth as well as double-digit improvement in operating income and earnings per share,” said mick farrell, resmed ceo. “in our core markets of sleep apnea, copd, and asthma, we are seeing continued sequential improvement in new patient volume and ongoing adoption of our mask and accessories resupply programs. our global teams have managed sg&a investments judiciously as we navigate through the global pandemic. we have seen great adoption of digital health and an increase in the importance of out-of-hospital healthcare these last 12 months, and that will only expand throughout 2021 as vaccines become more widely available, and our communities open up worldwide. we have continued to invest in focused r&d programs in digital health and core medtech innovation, to help accelerate our resmed growth strategy: improving 250 million lives in out-of-hospital healthcare in 2025.” financial results and operating metrics unaudited; $ in millions, except for per share amounts three months ended december 31, 2020 december 31, 2019 % change constant currency (a) revenue $ 800.0 $ 736.2 9 % 7 % gross margin (b) 57.8 % 58.0 % (0 ) non-gaap gross margin (b) 59.9 % 59.7 % 0 selling, general, and administrative expenses 169.5 171.4 (1 ) (3 ) research and development expenses 54.9 49.9 10 7 income from operations 221.7 197.8 12 non-gaap income from operations (b) 254.5 218.5 16 net income 179.5 160.6 12 non-gaap net income (b) 206.4 176.3 17 diluted earnings per share $ 1.23 $ 1.10 12 non-gaap diluted earnings per share (b) $ 1.41 $ 1.21 17 six months ended december 31, 2020 december 31, 2019 % change constant currency (a) revenue $ 1,552.0 $ 1,417.2 10 % 8 % gross margin (b) 58.1 % 57.8 % 1 non-gaap gross margin (b) 59.9 % 59.6 % 1 selling, general, and administrative expenses 328.5 338.9 (3 ) (5 ) research and development expenses 109.5 98.0 12 9 income from operations 438.6 368.9 19 non-gaap income from operations (b) 491.6 409.5 20 net income 357.9 280.7 27 non-gaap net income (b) 391.8 311.7 26 diluted earnings per share $ 2.45 $ 1.93 27 non-gaap diluted earnings per share (b) $ 2.68 $ 2.14 25 (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 second quarter results all comparisons are to the prior year period unless otherwise noted revenue in the u.s., canada, and latin america, excluding software as a service, grew by 5 percent, driven by strong sales across our mask product portfolio. revenue in europe, asia, and other markets grew by 10 percent on a constant currency basis, primarily driven by sales across our device and mask product portfolio. software as a service revenue increased by 6 percent, due to continued growth in resupply service offerings and stabilizing patient flow in out-of-hospital care settings. gross margin contracted by 20 basis points mainly due to restructuring expenses associated with the cessation of our portable oxygen concentrator business. non-gaap gross margin expanded by 20 basis points, mainly due to benefits from manufacturing efficiencies, product mix changes, and foreign exchange rates, partially offset by declines in average selling prices. selling, general, and administrative expenses decreased by 3 percent on a constant currency basis. sg&a expenses improved to 21.2 percent of revenue in the quarter, compared with 23.3 percent in the same period of the prior year. these changes in sg&a expenses were mainly due to savings in travel and other cost management as a result of the covid-19 pandemic. income from operations increased by 12 percent and non-gaap income from operations increased by 16 percent. net income grew by 12 percent and diluted earnings per share grew by 12 percent. non-gaap net income grew by 17 percent and non-gaap diluted earnings per share grew by 17 percent, predominantly attributable to strong sales and controlled operating costs. cash flow from operations for the quarter was $169.9 million, compared to net income in the current quarter of $179.5 million. during the quarter we paid $56.7 million in dividends. dividend program the resmed board of directors today declared a quarterly cash dividend of $0.39 per share. the dividend will have a record date of february 11, 2021, payable on march 18, 2021. 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 february 10, 2021, 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 february 10, 2021, through february 11, 2021, inclusive. webcast details resmed will discuss its second quarter fiscal year 2021 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 “q2 2021 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 two hours after the webcast by dialing +1 800-585-8367 (u.s.) or +1 416-621-4642 (outside u.s.) and entering the passcode 4291663. the telephone replay will be available until february 11, 2021. 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, litigation, and tax outlook – 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. resmed inc. and subsidiaries condensed consolidated statements of income (unaudited; $ in thousands, except for per share amounts) three months ended six months ended december 31, 2020 december 31, 2019 december 31, 2020 december 31, 2019 net revenue $ 800,011 $ 736,157 $ 1,551,955 $ 1,417,213 cost of sales 321,132 296,975 622,436 572,976 amortization of acquired intangibles (1) 11,164 12,052 23,143 25,488 restructuring - cost of sales (1) 5,232 - 5,232 - total cost of sales $ 337,528 $ 309,027 $ 650,811 $ 598,464 gross profit $ 462,483 $ 427,130 $ 901,144 $ 818,749 selling, general, and administrative 169,470 171,422 328,459 338,862 research and development 54,935 49,943 109,468 97,976 amortization of acquired intangibles (1) 7,689 8,556 15,932 13,599 restructuring - operating expenses (1) 8,673 - 8,673 - litigation settlement expenses (1) - (600 ) - (600 ) total operating expenses $ 240,767 $ 229,321 $ 462,532 $ 449,837 income from operations 221,716 197,809 438,612 368,912 other income (expenses), net: interest income (expense), net $ (5,792 ) $ (10,018 ) $ (12,517 ) $ (20,562 ) loss attributable to equity method investments (2,640 ) (6,924 ) (4,928 ) (13,786 ) other, net (2,692 ) (2,115 ) 5,279 (5,225 ) total other income (expenses), net (11,124 ) (19,057 ) (12,166 ) (39,573 ) income before income taxes $ 210,592 $ 178,752 $ 426,446 $ 329,339 income taxes 31,078 18,198 68,560 48,637 net income $ 179,514 $ 160,554 $ 357,886 $ 280,702 basic earnings per share $ 1.24 $ 1.11 $ 2.47 $ 1.95 diluted earnings per share $ 1.23 $ 1.10 $ 2.45 $ 1.93 non-gaap diluted earnings per share (1) $ 1.41 $ 1.21 $ 2.68 $ 2.14 basic shares outstanding 145,246 144,212 145,053 143,966 diluted shares outstanding 146,421 145,575 146,350 145,479 (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) december 31, 2020 june 30, 2020 assets current assets: cash and cash equivalents $ 255,865 $ 463,156 accounts receivable, net 509,364 474,643 inventories 474,821 416,915 prepayments and other current assets 211,435 168,745 total current assets $ 1,451,485 $ 1,523,459 non-current assets: property, plant, and equipment, net $ 459,472 $ 417,335 operating lease right-of-use assets 131,291 118,348 goodwill and other intangibles, net 2,323,490 2,338,492 deferred income taxes and other non-current assets 207,118 189,742 total non-current assets $ 3,121,371 $ 3,063,917 total assets $ 4,572,856 $ 4,587,376 liabilities and stockholders’ equity: current liabilities: accounts payable $ 122,166 $ 135,786 accrued expenses 280,332 270,353 operating lease liabilities, current 22,445 21,263 deferred revenue 105,238 98,617 income taxes payable 35,166 64,755 short-term debt 11,988 11,987 total current liabilities $ 577,335 $ 602,761 non-current liabilities: deferred revenue $ 86,899 $ 87,307 deferred income taxes 12,733 13,011 operating lease liabilities, non-current 117,641 101,880 other long term liabilities 9,481 8,347 long-term debt 813,732 1,164,133 long-term income taxes payable 90,051 112,910 total non-current liabilities $ 1,130,537 $ 1,487,588 total liabilities $ 1,707,872 $ 2,090,349 stockholders’ equity: common stock $ 582 $ 580 additional paid-in capital 1,574,240 1,570,694 retained earnings 3,076,569 2,832,991 treasury stock (1,623,256 ) (1,623,256 ) accumulated other comprehensive income (163,151 ) (283,982 ) total stockholders’ equity $ 2,864,984 $ 2,497,027 total liabilities and stockholders' equity $ 4,572,856 $ 4,587,376 resmed inc. and subsidiaries condensed consolidated statements of cash flows (unaudited; $ in thousands) six months ended december 31, 2020 december 31, 2019 cash flows from operating activities: net income $ 357,886 $ 280,702 adjustment to reconcile net income to cash provided by operating activities: depreciation and amortization 80,046 77,077 amortization of right-of-use assets 17,911 12,323 stock-based compensation costs 31,441 27,309 loss attributable to equity method investments 4,928 13,786 (gain) loss on equity investment (4,776 ) 5,419 restructuring expenses 8,673 - changes in fair value of business combination contingent consideration 500 (7 ) changes in operating assets and liabilities: accounts receivable, net (19,259 ) (275 ) inventories, net (34,212 ) (28,294 ) prepaid expenses, net deferred income taxes, and other current assets (29,875 ) (66,818 ) accounts payable, accrued expenses, and other (99,348 ) (88,927 ) net cash provided by operating activities $ 313,915 $ 232,295 cash flows from investing activities: purchases of property, plant, and equipment (48,443 ) (47,771 ) patent registration costs (8,367 ) (4,871 ) business acquisitions, net of cash acquired (437 ) (3,423 ) purchases of investments (14,446 ) (21,841 ) proceeds / (payments) on maturity of foreign currency contracts 19,922 1,064 net cash used in investing activities $ (51,771 ) $ (76,842 ) cash flows from financing activities: proceeds from issuance of common stock, net 18,614 24,297 taxes paid related to net share settlement of equity awards (46,507 ) (41,091 ) payment of business combination contingent consideration - (302 ) proceeds from borrowings, net of borrowing costs 55,000 730,000 repayment of borrowings (406,000 ) (700,012 ) dividends paid (113,165 ) (112,202 ) net cash used in financing activities $ (492,058 ) $ (99,310 ) effect of exchange rate changes on cash $ 22,623 $ 824 net increase / (decrease) in cash and cash equivalents (207,291 ) 56,967 cash and cash equivalents at beginning of period 463,156 147,128 cash and cash equivalents at end of period $ 255,865 $ 204,095 resmed inc. and subsidiaries 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” excludes amortization expense from acquired intangibles related to cost of sales and are reconciled below: three months ended six months ended december 31, 2020 december 31, 2019 december 31, 2020 december 31, 2019 revenue $ 800,011 $ 736,157 $ 1,551,955 $ 1,417,213 add back: deferred revenue fair value adjustment (a) - 657 - 2,102 non-gaap revenue $ 800,011 $ 736,814 $ 1,551,955 $ 1,419,315 gaap cost of sales $ 337,528 $ 309,027 $ 650,811 $ 598,464 less: amortization of acquired intangibles (a) (11,164 ) (12,052 ) (23,143 ) (25,488 ) less: restructuring - cost of sales (a) (5,232 ) - (5,232 ) - non-gaap cost of sales $ 321,132 $ 296,975 $ 622,436 $ 572,976 gaap gross profit $ 462,483 $ 427,130 $ 901,144 $ 818,749 gaap gross margin 57.8 % 58.0 % 58.1 % 57.8 % non-gaap gross profit $ 478,879 $ 439,839 $ 929,519 $ 846,339 non-gaap gross margin 59.9 % 59.7 % 59.9 % 59.6 % the measure “non-gaap income from operations” is reconciled with gaap income from operations below: three months ended six months ended december 31, 2020 december 31, 2019 december 31, 2020 december 31, 2019 gaap income from operations $ 221,716 $ 197,809 $ 438,612 $ 368,912 amortization of acquired intangibles - cost of sales (a) 11,164 12,052 23,143 25,488 amortization of acquired intangibles - operating expenses (a) 7,689 8,556 15,932 13,599 restructuring - cost of sales (a) 5,232 - 5,232 - restructuring - operating expenses (a) 8,673 - 8,673 - deferred revenue fair value adjustment (a) - 657 - 2,102 litigation settlement expenses (a) - (600 ) - (600 ) non-gaap income from operations $ 254,474 $ 218,474 $ 491,592 $ 409,501 resmed inc. and subsidiaries 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 six months ended december 31, 2020 december 31, 2019 december 31, 2020 december 31, 2019 gaap net income $ 179,514 $ 160,554 $ 357,886 $ 280,702 amortization of acquired intangibles - cost of sales, net of tax (a) 8,566 9,210 17,742 19,478 amortization of acquired intangibles - operating expenses, net of tax (a) 5,900 6,538 12,214 10,392 restructuring - cost of sales, net of tax (a) 4,663 - 4,663 - restructuring - operating expenses, net of tax (a) 7,730 - 7,730 - deferred revenue fair value adjustment, net of tax (a) - 503 - 1,610 litigation settlement expenses, net of tax (a) - (528 ) - (528 ) (gain) loss on equity investments (a) - - (8,476 ) - non-gaap net income (a) $ 206,373 $ 176,277 $ 391,759 $ 311,654 diluted shares outstanding 146,421 145,575 146,350 145,479 gaap diluted earnings per share $ 1.23 $ 1.10 $ 2.45 $ 1.93 non-gaap diluted earnings per share (a) $ 1.41 $ 1.21 $ 2.68 $ 2.14 (a) resmed adjusts for the impact of the amortization of acquired intangibles, restructuring expenses, deferred revenue fair value adjustment, litigation settlement expenses, and the (gain) loss on equity investments 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. resmed inc. and subsidiaries revenue by product and region (unaudited; $ in millions, except for per share amounts) three months ended december 31, 2020 (a) december 31, 2019 (a) % change constant currency (b) u.s., canada, and latin america devices $ 205.0 $ 203.5 1 % masks and other 221.8 204.5 8 total sleep and respiratory care $ 426.8 $ 408.0 5 software as a service 91.8 86.7 6 total $ 518.6 $ 494.7 5 combined europe, asia, and other markets devices $ 188.0 $ 162.3 16 % 10 % masks and other 93.4 79.2 18 12 total sleep and respiratory care $ 281.4 $ 241.5 17 10 global revenue devices $ 393.0 $ 365.8 7 % 5 % masks and other 315.2 283.7 11 9 total sleep and respiratory care $ 708.2 $ 649.5 9 7 software as a service 91.8 86.7 6 6 total $ 800.0 $ 736.2 9 7 six months ended december 31, 2020 (a) december 31, 2019 (a) % change constant currency (b) u.s., canada, and latin america devices $ 402.4 $ 390.4 3 % masks and other 427.5 387.8 10 total sleep and respiratory care $ 829.9 $ 778.2 7 software as a service 184.0 173.6 6 total $ 1,013.9 $ 951.8 7 combined europe, asia, and other markets devices $ 364.0 $ 314.2 16 % 11 % masks and other 174.0 151.2 15 10 total sleep and respiratory care $ 538.1 $ 465.4 16 10 global revenue devices $ 766.4 $ 704.6 9 % 6 % masks and other 601.6 539.0 12 10 total sleep and respiratory care $ 1,368.0 $ 1,243.6 10 8 software as a service 184.0 173.6 6 6 total $ 1,552.0 $ 1,417.2 10 8 (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.
