Resmed inc. announces results for the fourth quarter of fiscal year 2020
San diego--(business wire)--resmed inc. (nyse: rmd, asx: rmd), a world-leading digital health company, today announced results for its quarter ended june 30, 2020. fourth quarter 2020 highlights all comparisons are to the prior year period revenue increased 9% to $770.3 million; up 10% on a constant currency basis gaap gross margin of 58.3%; non-gaap gross margin expanded 60 bps to 59.9% net operating profit increased 84%; non-gaap operating profit up 24% gaap diluted earnings per share of $1.22; non-gaap diluted earnings per share of $1.33 full year 2020 highlights all comparisons are to the prior year period revenue increased 13% to $3.0 billion; up 15% on a constant currency basis gaap gross margin of 58.1%; non-gaap gross margin expanded 80 bps to 59.8% net operating profit increased 40%; non-gaap operating profit up 24% gaap diluted earnings per share of $4.27; non-gaap diluted earnings per share of $4.76 “our fourth quarter results reflect the strength and resiliency of our business in today’s uncertain environment. we finished fiscal year 2020 with double-digit revenue growth to $3.0 billion and operating profit up 24% on a non-gaap basis,” said mick farrell, resmed’s ceo. “throughout our fiscal fourth quarter, we continued to support the covid-19 pandemic response through increased manufacturing of our ventilators, including bilevels, and ventilation mask systems while also supporting our customers with digital health solutions and other innovative tools to enable remote care for patients. looking ahead, we are confident in our ability to navigate through the ongoing challenging clinical and economic environment to deliver for all our stakeholders. sleep labs and physician practices are reopening across many geographies, and we’re seeing accelerated adoption of digital health solutions which supports our long-term strategy. we remain vigilant and thoughtful about the outlook for our business as we continue to serve our customers, and we believe our strong foundation will accelerate our growth over the longer term.” financial results and operating metrics unaudited; $ in millions, except for per share amounts three months ended june 30, 2020 june 30, 2019 % change constant currency (a) revenue $ 770.3 $ 705.0 9 % 10 % gross margin (b) 58.3 % 57.1 % 2 non-gaap gross margin (b) 59.9 % 59.3 % 1 selling, general and administrative expenses 165.4 171.6 (4) 0 research and development expenses 52.5 51.1 3 4 income from operations 223.2 121.1 84 non-gaap income from operations (b) 243.4 196.2 24 net income 177.8 68.8 158 non-gaap net income (b) 193.3 137.6 40 diluted earnings per share $ 1.22 $ 0.48 154 non-gaap diluted earnings per share (b) $ 1.33 $ 0.95 40 twelve months ended june 30, 2020 june 30, 2019 % change constant currency (a) revenue $ 2,957.0 $ 2,606.6 13 % 15 % gross margin (b) 58.1 % 57.3 % 1 non-gaap gross margin (b) 59.8 % 59.0 % 1 selling, general and administrative expenses 676.7 645.0 5 7 research and development expenses 201.9 180.7 12 14 income from operations 809.7 579.3 40 non-gaap income from operations (b) 890.9 716.3 24 net income 621.7 404.6 54 non-gaap net income (b) 692.8 526.4 32 diluted earnings per share $ 4.27 $ 2.80 53 non-gaap diluted earnings per share (b) $ 4.76 $ 3.64 31 (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 fourth 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 4 percent, driven by strong sales across our mask product portfolio and increased demand for our ventilators due to covid-19, partially offset by a decrease in demand for our sleep devices. revenue in combined europe, asia, and other markets grew by 22 percent on a constant currency basis, primarily driven by sales across our device product portfolio, including increased demand for our ventilators due to covid-19. software as a service revenue increased by 7 percent, due to continued growth in resupply service offerings and stabilizing patient flow in out-of-hospital care settings. gross margin expanded by 120 basis points while non-gaap gross margin expanded by 60 basis points. these expansions were primarily due to benefits from product mix changes, partially offset by declines in manufacturing and procurement efficiencies driven by higher air freight costs. selling, general, and administrative expenses decreased by 4 percent or consistent on a constant currency basis. sg&a expenses improved to 21.5 percent of revenue in the quarter, compared with 24.3 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 84 percent and non-gaap income from operations increased by 24 percent. net income grew by 158 percent and diluted earnings per share grew by 154 percent, largely attributable to the impact of legal settlement expenses in the prior year. non-gaap net income grew by 40 percent and non-gaap diluted earnings per share grew by 40 percent, predominantly attributable to strong ventilator device sales and controlled operating costs. cash flow from operations for the quarter was $330.3 million, compared to net income in the current quarter of $177.8 million. during the quarter we paid $56.5 million in dividends. other business and operational highlights accelerated the launch of cloud-based remote monitoring software for ventilators and lumis devices across europe, via the airview platform. through the new release, clinicians and care providers can remotely monitor patients’ respiratory rate and blood oxygen saturation, two key indicators to track changes in a respiratory patient's condition. launched resmed maskselector, a digital tool to make remote patient mask selection and sizing easier and more effective, helping patients receive the care they need from home. resmed maskselector creates personalized resmed mask recommendations based on a patient’s sleep attributes and facial measurements enabling hmes to support patients when they can’t physically set them due to physical distancing. 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 august 20, 2020, payable on september 24, 2020. 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 august 19, 2020, 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 august 19, 2020, through august 20, 2020, inclusive. webcast details resmed will discuss its fourth quarter fiscal year 2020 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 “q4 2020 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 +1 833-241-4253 (u.s.) or +1 647-689-4204 (outside u.s.) and entering the passcode 2498310. the telephone replay will be available until august 19, 2020. 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 twelve months ended june 30, 2020 june 30, 2019 june 30, 2020 june 30, 2019 net revenue $ 770,343 $ 704,964 $ 2,957,013 $ 2,606,572 cost of sales 308,991 287,114 1,189,624 1,069,987 amortization of acquired intangibles (1) 11,980 15,418 49,603 42,514 total cost of sales $ 320,971 $ 302,532 $ 1,239,227 $ 1,112,501 gross profit $ 449,372 $ 402,432 $ 1,717,786 $ 1,494,071 selling, general and administrative 165,385 171,600 676,689 645,010 research and development 52,520 51,138 201,946 180,651 amortization of acquired intangibles (1) 8,220 8,019 30,092 32,424 restructuring expenses (1) - 9,401 - 9,401 litigation settlement expenses (1) - 41,199 (600) 41,199 acquisition-related expenses (1) - - - 6,123 total operating expenses $ 226,125 $ 281,357 $ 908,127 $ 914,808 income from operations 223,247 121,075 809,659 579,263 other income (expenses), net: interest income (expense), net $ (8,942) $ (12,264) $ (39,356) $ (33,857) loss attributable to equity method investments (5,976) (6,463) (25,058) (15,833) other, net 3,765 (6,587) (12,157) (10,726) total other income (expenses), net (11,153) (25,314) (76,571) (60,416) income before income taxes $ 212,094 $ 95,761 $ 733,088 $ 518,847 income taxes 34,259 26,964 111,414 114,255 net income $ 177,835 $ 68,797 $ 621,674 $ 404,592 basic earnings per share $ 1.23 $ 0.48 $ 4.31 $ 2.83 diluted earnings per share $ 1.22 $ 0.48 $ 4.27 $ 2.80 non-gaap diluted earnings per share (1) $ 1.33 $ 0.95 $ 4.76 $ 3.64 basic shares outstanding 144,792 143,435 144,338 143,111 diluted shares outstanding 145,866 144,687 145,652 144,484 (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, 2020 june 30, 2019 assets current assets: cash and cash equivalents $ 463,156 $ 147,128 accounts receivable, net 474,643 528,484 inventories 416,915 349,641 prepayments and other current assets 168,745 120,113 total current assets $ 1,523,459 $ 1,145,366 non-current assets: property, plant and equipment, net $ 417,335 $ 387,460 operating lease right-of-use assets 118,348 - goodwill and other intangibles, net 2,338,492 2,378,399 deferred income taxes and other non-current assets 189,742 196,457 total non-current assets $ 3,063,917 $ 2,962,316 total assets $ 4,587,376 $ 4,107,682 liabilities and stockholders’ equity: current liabilities: accounts payable $ 135,786 $ 115,725 accrued expenses 270,353 266,359 operating lease liabilities, current 21,263 - deferred revenue 98,617 88,667 income taxes payable 64,755 73,248 short-term debt 11,987 11,992 total current liabilities $ 602,761 $ 555,991 non-current liabilities: deferred revenue $ 87,307 $ 81,143 deferred income taxes 13,011 11,380 operating lease liabilities, non-current 101,880 - other long term liabilities 8,347 2,058 long-term debt 1,164,133 1,258,861 long-term income taxes payable 112,910 126,056 total non-current liabilities $ 1,487,588 $ 1,479,498 total liabilities $ 2,090,349 $ 2,035,489 stockholders’ equity: common stock $ 580 $ 575 additional paid-in capital 1,570,694 1,511,473 retained earnings 2,832,991 2,436,410 treasury stock (1,623,256) (1,623,256) accumulated other comprehensive income (283,982) (253,009) total stockholders’ equity $ 2,497,027 $ 2,072,193 total liabilities and stockholders' equity $ 4,587,376 $ 4,107,682 resmed inc. and subsidiaries condensed consolidated statements of cash flows (unaudited; $ in thousands) twelve months ended june 30, 2020 june 30, 2019 cash flows from operating activities: net income $ 621,674 $ 404,592 adjustment to reconcile net income to cash provided by operating activities: depreciation and amortization 154,850 150,795 amortization of right-of-use-assets 26,523 - stock-based compensation costs 57,559 52,073 loss attributable to equity method investments 25,058 15,833 impairment of equity investments 14,519 15,007 gain on previously held equity interest - (1,909) changes in fair value of business combination contingent consideration (7) (286) changes in operating assets and liabilities, net of effect of acquisitions: accounts receivable, net 54,383 (18,013) inventories, net (69,881) (84,188) prepaid expenses, net deferred income taxes and other current assets (58,999) (47,575) accounts payable, accrued expenses and other (23,424) (27,278) net cash provided by operating activities $ 802,255 $ 459,051 cash flows from investing activities: purchases of property, plant and equipment (95,330) (68,710) patent registration costs (10,608) (8,632) business acquisitions, net of cash acquired (27,910) (951,383) purchases of investments (31,616) (46,717) proceeds / (payments) on maturity of foreign currency contracts (14,397) (264) net cash used in investing activities $ (179,861) $ (1,075,706) cash flows from financing activities: proceeds from issuance of common stock, net 48,182 36,727 taxes paid related to net share settlement of equity awards (46,061) (28,104) purchases of treasury stock - (22,844) payment of business combination contingent consideration (302) (909) proceeds from borrowings, net of borrowing costs 1,190,000 1,519,230 repayment of borrowings (1,284,012) (711,745) dividends paid (225,093) (211,712) net cash (used in) / provided by financing activities $ (317,286) $ 580,643 effect of exchange rate changes on cash $ 10,920 $ (5,561) net increase / (decrease) in cash and cash equivalents 316,028 (41,573) cash and cash equivalents at beginning of period 147,128 188,701 cash and cash equivalents at end of period $ 463,156 $ 147,128 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 twelve months ended june 30, 2020 june 30, 2019 june 30, 2020 june 30, 2019 revenue $ 770,343 $ 704,964 $ 2,957,013 $ 2,606,572 add back: deferred revenue fair value adjustment (a) - 1,065 2,102 5,348 non-gaap revenue $ 770,343 $ 706,029 $ 2,959,115 $ 2,611,920 gaap cost of sales $ 320,971 $ 302,532 $ 1,239,227 $ 1,112,501 less: amortization of acquired intangibles (a) (11,980) (15,418) (49,603) (42,514) non-gaap cost of sales $ 308,991 $ 287,114 $ 1,189,624 $ 1,069,987 gaap gross profit 449,372 402,432 1,717,786 1,494,071 gaap gross margin 58.3 % 57.1 % 58.1 % 57.3 % non-gaap gross profit 461,352 418,915 1,769,491 1,541,933 non-gaap gross margin 59.9 % 59.3 % 59.8 % 59.0 % the measure “non-gaap income from operations” is reconciled with gaap income from operations below: three months ended twelve months ended june 30, 2020 june 30, 2019 june 30, 2020 june 30, 2019 gaap income from operations $ 223,247 $ 121,075 $ 809,659 $ 579,263 amortization of acquired intangibles - cost of sales (a) 11,980 15,418 49,603 42,514 amortization of acquired intangibles - operating expenses (a) 8,220 8,019 30,092 32,424 deferred revenue fair value adjustment (a) - 1,065 2,102 5,348 restructuring expenses (a) - 9,401 - 9,401 litigation settlement expenses (a) - 41,199 (600) 41,199 acquisition related expenses (a) - - - 6,123 non-gaap income from operations $ 243,447 $ 196,177 $ 890,856 $ 716,272 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 twelve months ended june 30, 2020 june 30, 2019 june 30, 2020 june 30, 2019 gaap net income $ 177,835 $ 68,797 $ 621,674 $ 404,592 amortization of acquired intangibles - cost of sales, net of tax (a) 9,167 11,447 37,933 32,477 amortization of acquired intangibles - operating expenses, net of tax (a) 6,290 5,954 23,012 24,769 deferred revenue fair value adjustment, net of tax (a) - 786 1,610 4,067 restructuring expenses, net of tax (a) - 7,205 - 7,205 litigation settlement expenses, net of tax (a) - 36,248 (528) 36,248 fair value impairment of investment (a) - 5,000 9,100 5,000 u.s. tax reform - 2,149 - 6,654 acquisition-related expenses (a) - - - 5,362 non-gaap net income (a) $ 193,292 $ 137,586 $ 692,801 $ 526,374 diluted shares outstanding 145,866 144,687 145,652 144,484 gaap diluted earnings per share $ 1.22 $ 0.48 $ 4.27 $ 2.80 non-gaap diluted earnings per share (a) $ 1.33 $ 0.95 $ 4.76 $ 3.64 (a) resmed adjusts for the impact of the amortization of acquired intangibles, deferred revenue fair value adjustment, restructuring expenses, litigation settlement expenses, fair value impairment of investment, the impact of u.s. tax reform on income tax expense and acquisition-related expenses 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 june 30, 2020 (a) june 30, 2019 (a) % change constant currency (b) u.s., canada and latin america devices $ 205.9 $ 202.9 1 % masks and other 194.7 182.6 7 total sleep and respiratory care $ 400.5 $ 385.5 4 software as a service 91.5 85.2 7 total $ 492.0 $ 470.7 5 combined europe, asia and other markets devices $ 205.8 $ 155.5 32 % 35 % masks and other 72.6 78.8 - 8 - 6 total sleep and respiratory care $ 278.3 $ 234.3 19 22 global revenue devices $ 411.6 $ 358.4 15 % 16 % masks and other 267.2 261.4 2 3 total sleep and respiratory care $ 678.9 $ 619.8 10 11 software as a service 91.5 85.2 7 7 total $ 770.3 $ 705.0 9 10 twelve months ended june 30, 2020 (a) june 30, 2019 (a) % change constant currency (b) u.s., canada and latin america devices $ 792.8 $ 743.1 7 % masks and other 779.6 677.4 15 total sleep and respiratory care $ 1,572.3 $ 1,420.5 11 software as a service 354.6 275.8 29 total $ 1,927.0 $ 1,696.3 14 combined europe, asia and other markets devices $ 715.1 $ 618.5 16 % 19 % masks and other 315.0 291.8 8 11 total sleep and respiratory care $ 1,030.1 $ 910.3 13 16 global revenue devices $ 1,507.8 $ 1,361.6 11 % 12 % masks and other 1,094.6 969.2 13 14 total sleep and respiratory care $ 2,602.4 $ 2,330.8 12 13 software as a service 354.6 275.8 29 29 total $ 2,957.0 $ 2,606.6 13 15 (a) totals and subtotals may not add due to rounding. 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.
