ResMed Inc. Announces Results for the Third Quarter of Fiscal Year 2016
Revenue increased 7% to $453.9 million; up 9% on a constant currency basis
GAAP diluted earnings per share of $0.63; non-GAAP diluted earnings per share of $0.68
Operating cash flow of $122.1 million in the third quarter
San Diego, April 26, 2016 – ResMed Inc. (NYSE: RMD) today announced results for its quarter ended March 31, 2016. Revenue for the quarter was $453.9 million, a 7 percent increase compared with the quarter ended March 31, 2015; this is a 9 percent increase on a constant currency basis.
“We have seen sustained success with the execution of our healthcare informatics strategy driving seven consecutive quarters of device growth, since the Q1 2015 launch of our Air Solutions platform. This quarter our team delivered strong double-digit growth in the Americas region, with solid global constant currency growth of 9%. Customers have responded to the value proposition of our Air Solutions platform, including the efficiencies it brings to their businesses and its ability to help them drive even better patient outcomes through connected care,” said Mick Farrell, ResMed’s chief executive officer.
“We continue to build on our offerings across our strategy for both products and informatics solutions. This quarter we announced the close of the Inova transaction, which allows us to expand our respiratory care offerings to include portable oxygen concentrators. With the acquisition of Brightree in April, we have established ourselves as the outright leader for cloud-based end-to-end solutions in HME, home health, and hospice channels.”
Farrell continued, “This expansion into new products and informatics solutions allows ResMed to continue its global leadership as a tech-driven medical device company. We are liberating healthcare data and unlocking value by providing actionable connected care solutions for patients, physicians, providers, and payers.”
Analysis of third quarter results
In the third quarter of fiscal year 2016, revenue in the Americas was $282.2 million, a 12 percent increase over the prior year's quarter. Revenue in combined EMEA and APAC was $171.7 million, flat compared with the quarter ended March 31, 2015; this is a 3 percent increase on a constant currency basis.
Gross margin in the third quarter was 57.3 percent; this is lower than the prior year’s quarter, mainly due to changes in product mix, average selling prices and geographic mix.
Income from operations for the quarter was $104.3 million, a 1 percent decrease compared with the quarter ended March 31, 2015. Non-GAAP income from operations for the quarter was $112.4 million, a 4 percent increase compared with the quarter ended March 31, 2015.
Selling, general and administrative expenses were $119.4 million for the third quarter of fiscal year 2016, a 3 percent increase over the quarter ended March 31, 2015; this is a 5 percent increase on a constant currency basis. SG&A expenses improved to 26.3 percent of revenue in the quarter, compared with 27.5 percent in the quarter ended March 31, 2015.
Research and development expenses were $28.1 million for the third quarter of fiscal year 2016, or 6.2 percent of revenue. R&D expenses increased by 4 percent compared with the quarter ended March 31, 2015; this is an 11 percent increase on a constant currency basis.
Amortization of acquired intangible assets was $4.6 million during the quarter. Stock-based compensation costs incurred during the quarter of $10.9 million consisted of expenses associated with employee equity grants, and the company’s employee stock purchase plan.
Net income for the quarter was $88.5 million, a 3 percent decrease compared with the quarter ended March 31, 2015. Non-GAAP net income for the quarter ended March 31, 2016 was $95.4 million, a 3 percent increase compared with the quarter ended March 31, 2015 (non-GAAP measures exclude amortization of acquired intangibles and $3.6 million in acquisition expenses associated with our acquisitions of Inova and Brightree).
GAAP diluted earnings per share for the quarter were $0.63, a 2 percent decrease compared with the quarter ended March 31, 2015. Non-GAAP diluted earnings per share for the quarter were $0.68, a 5 percent increase compared with the quarter ended March 31, 2015.
Cash flow from operations for the quarter was $122.1 million, an increase from the $90.9 million reported in the quarter ended March 31, 2015 and net income in the current quarter of $88.5 million.
Share repurchase program
As previously announced, the company has temporarily suspended its share repurchase program due to recent acquisitions. The company did not repurchase any shares during the third quarter, however the company may, at any time, elect to reinitiate the share repurchase program.
The ResMed board of directors today declared a quarterly dividend of $0.30 per share. The dividend will have a record date of May 19, 2016, payable on June 16, 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 May 17, 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 May 18, 2016 through May 19, 2016 inclusive.
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 “Q3 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 72407549. The telephone replay will be available until May 9, 2016.
ResMed (NYSE:RMD) changes lives with award-winning medical devices and cutting-edge cloud-based software applications that better diagnose, treat and manage sleep apnea, chronic obstructive pulmonary disease (COPD) and other chronic diseases. ResMed is a global leader in connected care, with more than 1 million patients remotely monitored every day. Our 5,000-strong team is committed to creating the world’s best tech-driven medical device company – improving quality of life, reducing the impact of chronic disease, and saving healthcare costs in more than 100 countries.
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.