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, Calif. – January 21, 2016–ResMed (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.

Contacts:

For News Media

Alison Graves

Director, Global Corporate Communications

+1 (858) 836-6789

news@resmed.com

For Investors

Agnes Lee

Senior Director, Investor Relations

+1 (858) 836-5971

investorrelations@resmed.com