ResMed Inc. Announces Results for the Fourth Quarter of Fiscal Year 2024


  • Year-over-year revenue grows 9%, operating profit up 38%, non-GAAP operating profit up 30%
  • Operating cash flow of $440 million
  • Quarterly dividend increases 10% to $0.53 per share
  • Company to host an Investor Day on September 30, 2024

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, Aug. 01, 2024 (GLOBE NEWSWIRE) -- ResMed Inc. (NYSE: RMD, ASX: RMD) today announced results for its quarter ended June 30, 2024.

Fourth Quarter 2024 Highlights
All comparisons are to the prior year period

  • Revenue increased by 9% to $1.2 billion; up 10% on a constant currency basis 
  • Gross margin improved 350 bps to 58.5%; non-GAAP gross margin improved 330 bps to 59.1%
  • Income from operations increased 38%; non-GAAP income from operations up 30%
  • Operating cash flow of $440 million and debt repayments of $300 million
  • Diluted earnings per share of $1.98; non-GAAP diluted earnings per share of $2.08

Full Year 2024 Highlights
All comparisons are to the prior year period

  • Revenue increased by 11% to $4.7 billion; up 11% on a constant currency basis 
  • Gross margin improved 90 bps to 56.7%; non-GAAP gross margin improved 120 bps to 57.7%
  • Income from operations increased 17%; non-GAAP income from operations up 21%
  • Operating cash flow of $1.4 billion and debt repayments of $0.8 billion
  • Diluted earnings per share of $6.92; non-GAAP diluted earnings per share of $7.72

“Our fourth quarter and full-year fiscal year 2024 results demonstrate strong performance across all sectors of our business,” said Mick Farrell, Chairman & CEO of ResMed. “Ongoing patient and customer demand for our best-in-class products and software solutions is incredibly strong, driving solid growth across our devices, masks, and software businesses. The global ResMed team’s focus on operating excellence, ongoing cost discipline, and profitable growth acceleration resulted in gross margin expansion, strong operating leverage, and double-digit growth in bottom-line profitability.

“Nearly 2.5 billion suffer from major sleep health and breathing disorders. As the market leader in these significantly underpenetrated markets, we’re well-positioned as the clear leader to drive increased market penetration, demand generation, and accelerate growth for our businesses. We’re laser-focused on increasing awareness with the fast-growth population of sleep-health-interested consumers, creating virtual pathways that expand access to therapies, while offering a broad portfolio of medical device products, software solutions, and beyond, as we deliver value for all ResMed stakeholders.”

Financial Results and Operating Metrics

Unaudited; $ in millions, except for per share amounts

 Three Months Ended
 June 30,
2024
 June 30,
2023
 % Change Constant
Currency(A)
Revenue$1,223.2  $1,122.1  9% 10%
Gross margin 58.5%  55.0% 6   
Non-GAAP gross margin(B) 59.1%  55.8% 6   
Selling, general, and administrative expenses 242.2   240.7  1  1 
Research and development expenses 80.9   78.1  3  4 
Income from operations 381.2   275.3  38   
Non-GAAP income from operations(B) 400.5   307.0  30   
Net income 292.2   229.7  27   
Non-GAAP net income(B) 306.3   235.5  30   
Diluted earnings per share$1.98  $1.56  27   
Non-GAAP diluted earnings per share(B)$2.08  $1.60  30   


 Twelve Months Ended
 June 30,
2024
 June 30,
2023
 % Change Constant
Currency(A)
Revenue$4,685.3  $4,223.0  11% 11%
Gross margin 56.7%  55.8% 2   
Non-GAAP gross margin(B) 57.7%  56.5% 2   
Selling, general, and administrative expenses 917.1   874.0  5  5 
Research and development expenses 307.5   287.6  7  8 
Income from operations 1,319.9   1,131.9  17   
Non-GAAP income from operations(B) 1,478.4   1,224.4  21   
Net income 1,021.0   897.6  14   
Non-GAAP net income(B) 1,139.3   949.8  20   
Diluted earnings per share$6.92  $6.09  14   
Non-GAAP diluted earnings per share(B)$7.72  $6.44  20   

(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 grew by 10 percent on a constant currency basis, driven by increased demand for our sleep devices and masks portfolio, as well as strong growth across our Software as a Service business.
    • Revenue in the U.S., Canada, and Latin America, excluding Software as a Service, grew by 10 percent.
    • Revenue in Europe, Asia, and other markets, excluding Software as a Service, grew by 8 percent on a constant currency basis.
    • Software as a Service revenue increased by 10 percent, reflecting continued organic growth in our SaaS portfolio.
  • Gross margin increased by 350 basis points mainly due to reduced freight and manufacturing cost improvements, an increase in average selling prices as well as favorable product mix. Non-GAAP gross margin increased by 330 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 19.8 percent of revenue in the quarter, compared with 21.5 percent in the same period of the prior year. The modest increase in SG&A expenses reflects cost management initiatives implemented during the December quarter.
  • Income from operations increased by 38 percent, and non-GAAP income from operations increased by 30 percent.
  • Net income for the quarter was $292 million and diluted earnings per share was $1.98. Non-GAAP net income increased by 30 percent to $306 million, and non-GAAP diluted earnings per share increased by 30 percent to $2.08, predominantly attributable to strong sales and gross margin improvement as well as modest growth in operating expenses.
  • Operating cash flow for the quarter was $440 million, compared to net income in the current quarter of $292 million and non-GAAP net income of $306 million.
  • During the quarter, we paid $71 million in dividends and repurchased 232,000 shares for consideration of $50 million as part of our ongoing capital management.

Other Business and Operational Highlights

  • Supported the presentation of 39 clinical research abstracts at the annual American Thoracic Society (26 abstracts) and SLEEP (13 abstracts) conferences, demonstrating the breadth and depth of ResMed’s leadership in generating and analyzing real-world evidence in support of better clinical and patient outcomes. Research focused on a variety of topics including the increasing prevalence of Obstructive Sleep Apnea (OSA), the economic benefits of treating OSA, and the relationship between OSA and depression in women.

Dividend program
The ResMed board of directors today declared a quarterly cash dividend of $0.53 per share. The dividend will have a record date of August 15, 2024, payable on September 19, 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 August 14, 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 August 14, 2024, through August 15, 2024, inclusive. 

Webcast details
ResMed will discuss its fourth 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 “Q4 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 13747201. The telephone replay will be available until August 15, 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 the expected impact of 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.

Condensed Consolidated Statements of Operations
(Unaudited; $ in thousands, except for per share amounts)

 Three Months Ended Twelve Months Ended
 June 30,
2024
 June 30,
2023
 June 30,
2024
 June 30,
2023
        
Net revenue$1,223,195  $1,122,057  $4,685,297  $4,222,993 
        
Cost of sales 499,681   496,276   1,982,769   1,836,935 
Amortization of acquired intangibles(1) 7,987   8,395   32,963   30,396 
Masks with magnets field safety notification expenses(1)       6,351    
Astral field safety notification expenses(1)       7,911    
Total cost of sales$507,668  $504,671  $2,029,994  $1,867,331 
Gross profit$715,527  $617,386  $2,655,303  $2,355,662 
        
Selling, general, and administrative 242,187   240,687   917,136   874,003 
Research and development 80,861   78,144   307,525   287,642 
Amortization of acquired intangibles(1) 11,262   12,319   46,521   42,020 
Restructuring expenses(1)    9,177   64,228   9,177 
Acquisition related expenses(1)    1,792      10,949 
Total operating expenses$334,310  $342,119  $1,335,410  $1,223,791 
Income from operations$381,217  $275,267  $1,319,893  $1,131,871 
        
Other income (expenses), net:       
Interest expense, net$(5,920) $(14,943) $(45,708) $(47,379)
Gain (loss) attributable to equity method investments 868   (2,228)  (1,848)  (7,265)
Gain on equity investments(1) (15,473)  (1,583)  (4,045)  9,922 
Gain on insurance recoveries(1)    20,227      20,227 
Other, net (2,960)  61   (3,494)  (5,712)
Total other income (expenses), net (23,485)  1,534   (55,095)  (30,207)
Income before income taxes$357,732  $276,801  $1,264,798  $1,101,664 
Income taxes 65,495   47,137   243,847   204,108 
Net income$292,237  $229,664  $1,020,951  $897,556 
        
Basic earnings per share$1.99  $1.56  $6.94  $6.12 
Diluted earnings per share$1.98  $1.56  $6.92  $6.09 
Non-GAAP diluted earnings per share(1)$2.08  $1.60  $7.72  $6.44 
        
Basic shares outstanding 146,915   147,015   147,021   146,765 
Diluted shares outstanding 147,533   147,554   147,550   147,455 

(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)

 June 30,
2024
 June 30,
2023
Assets   
Current assets:   
Cash and cash equivalents$238,361  $227,891 
Accounts receivable, net 837,275   704,909 
Inventories 822,250   998,012 
Prepayments and other current assets 459,833   437,018 
Total current assets$2,357,719  $2,367,830 
Non-current assets:   
Property, plant, and equipment, net$548,025  $537,856 
Operating lease right-of-use assets 151,121   127,955 
Goodwill and other intangibles, net 3,327,959   3,322,640 
Deferred income taxes and other non-current assets 487,570   395,427 
Total non-current assets$4,514,675  $4,383,878 
Total assets$6,872,394  $6,751,708 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$237,728  $150,756 
Accrued expenses 377,678   365,660 
Operating lease liabilities, current 25,278   21,919 
Deferred revenue 152,554   138,072 
Income taxes payable 107,517   72,224 
Short-term debt 9,900   9,902 
Total current liabilities$910,655  $758,533 
Non-current liabilities:   
Deferred revenue$137,343  $119,186 
Deferred income taxes 79,339   90,650 
Operating lease liabilities, non-current 141,444   116,853 
Other long-term liabilities 42,257   68,166 
Long-term debt 697,313   1,431,234 
Long-term income taxes payable    37,183 
Total non-current liabilities$1,097,696  $1,863,272 
Total liabilities$2,008,351  $2,621,805 
Stockholders’ equity   
Common stock$588  $588 
Additional paid-in capital 1,896,604   1,772,083 
Retained earnings 4,991,647   4,253,016 
Treasury stock (1,773,267)  (1,623,256)
Accumulated other comprehensive income (251,529)  (272,528)
Total stockholders’ equity$4,864,043  $4,129,903 
Total liabilities and stockholders’ equity$6,872,394  $6,751,708 


Condensed Consolidated Statements of Cash Flows
(Unaudited; $ in thousands)

 Three Months Ended Twelve Months Ended
 June 30,
2024
 June 30,
2023
 June 30,
2024
 June 30,
2023
Cash flows from operating activities:       
Net income$292,237  $229,664  $1,020,951  $897,556 
Adjustment to reconcile net income to cash provided by operating activities:       
Depreciation and amortization 43,677   46,760   176,870   165,156 
Amortization of right-of-use assets 11,077   8,440   39,339   32,406 
Stock-based compensation costs 21,392   19,927   80,184   71,142 
(Gain) loss attributable to equity method investments, net of dividends received (868)  5,102   1,848   10,138 
(Gain) loss on equity investments 15,473   1,584   4,045   (9,922)
Non-cash restructuring expenses    9,177   33,239   9,177 
Gain on insurance recoveries    (20,227)     (20,227)
Changes in operating assets and liabilities:       
Accounts receivable, net (57,523)  (18,059)  (134,278)  (106,511)
Inventories, net 8,910   6,257   172,203   (248,833)
Prepaid expenses, net deferred income taxes and other current assets (16,237)  (51,518)  (115,213)  (138,125)
Accounts payable, accrued expenses, income taxes payable and other 121,975   330   122,072   31,342 
Net cash provided by operating activities$440,113  $237,437  $1,401,260  $693,299 
Cash flows from investing activities:       
Purchases of property, plant, and equipment (24,881)  (34,449)  (99,460)  (119,672)
Patent registration and acquisition costs (1,442)  (4,285)  (15,396)  (14,328)
Business acquisitions, net of cash acquired (19,697)  (1,524)  (133,464)  (1,012,749)
Purchases of investments (3,073)  (2,500)  (12,765)  (32,229)
Proceeds from exits of investments 750      1,000   3,937 
(Payments) / proceeds on maturity of foreign currency contracts 1,833   (3,765)  (9,699)  15,196 
Net cash used in investing activities$(46,510) $(46,523) $(269,784) $(1,159,845)
Cash flows from financing activities:       
Proceeds from issuance of common stock, net 27,696   23,493   53,094   49,142 
Purchases of treasury stock (50,004)     (150,011)   
Taxes paid related to net share settlement of equity awards (421)  (334)  (8,757)  (30,631)
Payments of business combination contingent consideration    (2,045)  (1,293)  (2,361)
Proceeds from borrowings, net of borrowing costs       105,000   1,070,000 
Repayment of borrowings (300,000)  (145,000)  (835,000)  (405,000)
Dividends paid (70,553)  (64,705)  (282,320)  (258,276)
Net cash (used in) / provided by financing activities$(393,282) $(188,591) $(1,119,287) $422,874 
Effect of exchange rate changes on cash$130  $(2,326) $(1,719) $(2,147)
Net increase / (decrease) in cash and cash equivalents 451   (3)  10,470   (45,819)
Cash and cash equivalents at beginning of period 237,910   227,894   227,891   273,710 
Cash and cash equivalents at end of period$238,361  $227,891  $238,361  $227,891 


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 Twelve Months Ended
 June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
        
Revenue$1,223,195  $1,122,057  $4,685,297  $4,222,993 
        
GAAP cost of sales$507,668  $504,671  $2,029,994  $1,867,331 
Less:Amortization of acquired intangibles(A) (7,987)  (8,395)  (32,963)  (30,396)
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$499,681  $496,276  $1,982,769  $1,836,935 
        
GAAP gross profit$715,527  $617,386  $2,655,303  $2,355,662 
GAAP gross margin 58.5%  55.0%  56.7%  55.8%
Non-GAAP gross profit$723,514  $625,781  $2,702,528  $2,386,058 
Non-GAAP gross margin 59.1%  55.8%  57.7%  56.5%


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

 Three Months Ended Twelve Months Ended
 June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
        
GAAP income from operations$381,217 $275,267 $1,319,893 $1,131,871
Amortization of acquired intangibles—cost of sales(A) 7,987  8,395  32,963  30,396
Amortization of acquired intangibles—operating expenses(A) 11,262  12,319  46,521  42,020
Restructuring(A)   9,177  64,228  9,177
Masks with magnets field safety notification expenses(A)     6,351  
Astral field safety notification expenses(A)     7,911  
Acquisition-related expenses(A)   1,792  483  10,949
Non-GAAP income from operations$400,466 $306,950 $1,478,350 $1,224,413


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, 2024 June 30, 2023 June 30, 2024 June 30, 2023
        
GAAP net income$292,237  $229,664  $1,020,951  $897,556 
Amortization of acquired intangibles—cost of sales(A) 7,987   8,395   32,963   30,396 
Amortization of acquired intangibles—operating expenses(A) 11,262   12,319   46,521   42,020 
Restructuring expenses(A)    9,177   64,228   9,177 
Masks with magnets field safety notification expenses(A)       6,351    
Astral field safety notification expenses(A)       7,911    
Acquisition-related expenses(A)    1,792   483   10,949 
Gain on insurance recoveries(A)    (20,227)     (20,227)
Income tax effect on non-GAAP adjustments(A) (5,145)  (5,631)  (40,114)  (20,114)
Non-GAAP net income(A)$306,341  $235,489  $1,139,294  $949,757 
        
GAAP diluted shares outstanding 147,533   147,554   147,550   147,455 
GAAP diluted earnings per share$1.98  $1.56  $6.92  $6.09 
Non-GAAP diluted earnings per share(A)$2.08  $1.60  $7.72  $6.44 

(A) ResMed adjusts for the impact of the amortization of acquired intangibles, restructuring expenses, field safety notification expenses, acquisition-related expenses, gain on insurance recoveries, 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
 June 30,
2024
(A)June 30,
2023
(A)% Change Constant
Currency(B)
U.S., Canada, and Latin America       
Devices$406.2 $387.2 5%  
Masks and other 321.2  273.7 17   
Total U.S., Canada and Latin America$727.4 $660.9 10   
        
Combined Europe, Asia, and other markets       
Devices$228.8 $215.2 6% 8%
Masks and other 115.0  107.4 7  9 
Total Combined Europe, Asia and other markets$343.9 $322.6 7  8 
        
Global revenue       
Total Devices$635.1 $602.4 5% 6%
Total Masks and other 436.2  381.0 14  15 
Total Sleep and Respiratory Care$1,071.3 $983.5 9  9 
        
Software as a Service 151.9  138.6 10  10 
Total$1,223.2 $1,122.1 9  10 
        


 Twelve Months Ended
 June 30,
2024
(A)June 30,
2023
(A)%
Change
 Constant
Currency(B)
U.S., Canada, and Latin America       
Devices$1,522.8 $1,444.4 5%  
Masks and other 1,199.8  1,039.0 15   
Total U.S., Canada and Latin America$2,722.6 $2,483.4 10   
        
Combined Europe, Asia, and other markets       
Devices$921.3 $826.3 11% 10%
Masks and other 457.4  415.3 10  8 
Total Combined Europe, Asia and other markets$1,378.6 $1,241.6 11  10 
        
Global revenue       
Total Devices$2,444.0 $2,270.7 8% 7%
Total Masks and other 1,657.2  1,454.3 14  13 
Total Sleep and Respiratory Care$4,101.2 $3,725.0 10  10 
        
Software as a Service 584.1  498.0 17  17 
Total$4,685.3 $4,223.0 11  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.

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