Exhibit 99.1

 

LOGO  

 

For investors

Amy Wakeham

O: 858-836-5000

investorrelations@resmed.com

 

For media

Jayme Rubenstein

O: 858-836-6798

news@resmed.com

ResMed Inc. Announces Results for the First Quarter of Fiscal Year 2019

~ Strong year-over-year growth in revenue, net income, and earnings per share ~

~ Growth balanced across the entire product portfolio ~

Note: A webcast of ResMed’s conference call will be available at 4:30 p.m. EDT today at http://investor.resmed.com

SAN DIEGO, October 25, 2018 – ResMed Inc. (NYSE: RMD, ASX: RMD), a world-leading connected health company, today announced results for its quarter ended September 30, 2018.

First Quarter 2019 Highlights

 

   

Revenue increased 12% to $588.3 million; up 13% on a constant currency basis

 

   

Net income increased by 23%; non-GAAP net income up 23%

 

   

GAAP diluted earnings per share of $0.73; non-GAAP diluted earnings per share of $0.81

“Our first quarter 2019 results demonstrate continued strong performance across our business with 13 percent top-line revenue growth, driven by growth across our entire portfolio of offerings,” said Mick Farrell, ResMed’s chief executive officer. “We also delivered another quarter of improving operating leverage resulting in double-digit growth at the bottom line.”

Farrell continued, “During the quarter we expanded our product portfolio with new masks and made ongoing upgrades to our digital health solutions, separating ResMed from the competition. We provide customers with services and solutions to help improve patient outcomes, create efficiencies, and reduce overall healthcare system costs.”


Financial Results and Operating Metrics

Unaudited; $ in millions, except for per share amounts

 

     Three Months Ended  
     September 30,
2018
    September 30,
2017
    % Change     Constant
Currency (A)
 

Revenue

   $ 588.3     $ 523.7       12     13

Gross margin

     58.3     58.4     —      

Selling, general and administrative expenses

     147.3       143.8       2       4  

Research and development expenses

     38.8       37.4       4       8  

Income from operations

     144.1       112.6       28    

Net income

     105.7       86.1       23    

Non-GAAP net income

     116.3       94.1       23    

Diluted earnings per share

   $ 0.73     $ 0.60       22    

Non-GAAP diluted earnings per share

   $ 0.81     $ 0.66       23    

 

(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.

Discussion of First Quarter Results

 

   

Revenue in U.S., Canada, and Latin America, excluding Software as a Service, grew by 10 percent compared to the prior year period, driven by strong sales across our mask and device product portfolios. Revenue in combined Europe, Asia and other markets grew by 16 percent on a constant currency basis compared to the same period of the prior year, primarily driven by strong device sales. Software as a Service revenue increased 25 percent, compared to the prior year period due to continued growth in our Brightree service offerings and incremental contribution from the acquisition of HEALTHCAREfirst, which closed early in the first quarter.

 

   

Gross margin was slightly lower than the prior year quarter mainly due to declines in average selling prices, which were partially offset by manufacturing and procurement efficiencies.

 

   

Selling, general and administrative expenses increased by 2 percent compared to the prior year period, or by 4 percent on a constant currency basis, due to continued improvements in operating leverage. SG&A expenses improved to 25.0 percent of revenue in the quarter, compared with 27.5 percent in the same period of the prior year.

 

   

Income from operations increased by 28 percent and non-GAAP income from operations increased by 26 percent compared to the prior year period.

 

   

Net income increased by 23 percent and non-GAAP net income increased by 23 percent compared to the prior year period. Non-GAAP measures adjust for amortization of acquired intangibles and impact of U.S. tax reform on income tax expense.

 

   

GAAP diluted earnings per share increased by 22 percent and non-GAAP diluted earnings per share were 23 percent higher compared with the same period of the prior year.

 

   

Cash flow from operations for the quarter was $48.1 million, compared to net income in the current quarter of $105.7 million. Cash flow from operations included tax payments of $125.0 million compared with $30.2 million in the same period of the prior year. During the quarter we paid $52.8 million in dividends.


Other Business and Operational Highlights

 

   

Completed the acquisition of HEALTHCAREfirst, a provider of software solutions and services for home health and hospice agencies, for consideration of $126.3 million.

 

   

Announced a joint venture with Verily, combining ResMed’s expertise in sleep apnea and Verily’s advanced health data analytics technologies, to study the health and financial impacts of undiagnosed and untreated sleep apnea, and to develop software solutions that enable healthcare providers to more efficiently identify, diagnose, treat and manage individuals with sleep apnea and other breathing-related sleep disorders.

 

   

Introduced key upgrades to the Astral life support ventilator, including AutoEPAP functionality along with customizable program names and easily changeable interfaces.

 

   

Introduced AirFit F30, ResMed’s first minimal-contact full face CPAP mask, expanding the mask product portfolio to meet the needs of a select group of PAP users who need a full face mask but are looking for the flexibility to wear glasses in bed or to reduce facial contact with a full face mask.

Share repurchase program

During the quarter, we repurchased 200,000 shares at a cost of $22.8 million, as part of our ongoing capital management program.

Dividend program

The ResMed board of directors today declared a quarterly cash dividend of $0.37 per share. The dividend will have a record date of November 8, 2018, payable on December 13, 2018. 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 November 7, 2018 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 November 7, 2018 through November 8, 2018, inclusive.


Webcast details

ResMed will discuss its first quarter fiscal year 2019 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 “Q1 2019 Earnings Webcast” to register and listen to the live webcast. A replay of the earnings webcast will be accessible on our 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 800-585-8367 (U.S.) or +1 416-621-4642 (outside U.S.), and entering the passcode 6686709. The telephone replay will be available until November 8, 2018.

About ResMed

ResMed (NYSE: RMD, ASX: RMD), a world-leading connected health company with more than 6 million cloud-connected devices for daily remote patient monitoring, changes lives with every breath. Its award-winning devices and software solutions help treat and manage sleep apnea, chronic obstructive pulmonary disease and other respiratory conditions. Its 6,000-member team strives to improve patients’ quality of life, reduce the impact of chronic disease and save healthcare costs in more than 120 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, 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.

- More -


RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited; $ in thousands, except for per share amounts)

 

     Three Months Ended  
     September 30,
2018
    September 30,
2017
 

Net revenue

   $ 588,279     $ 523,659  

Cost of sales

     245,186       218,054  
  

 

 

   

 

 

 

Gross profit

   $ 343,093     $ 305,605  

Operating expenses:

    

Selling, general and administrative

     147,303       143,849  

Research and development

     38,791       37,415  

Amortization of acquired intangible assets (1)

     12,867       11,783  
  

 

 

   

 

 

 

Total operating expenses

   $ 198,961     $ 193,047  

Income from operations (1)

     144,132       112,558  

Other income (expenses), net:

    

Interest income (expense), net

   $ (2,786   $ (2,915

Other, net

     (2,465     (1,158

Total other income (expenses), net

     (5,251     (4,073
  

 

 

   

 

 

 

Income before income taxes

   $ 138,881     $ 108,485  

Income taxes

     33,144       22,360  
  

 

 

   

 

 

 

Net income (1)

   $ 105,737     $ 86,125  
  

 

 

   

 

 

 

Basic earnings per share

   $ 0.74     $ 0.61  

Diluted earnings per share

   $ 0.73     $ 0.60  

Non-GAAP diluted earnings per share (1)

   $ 0.81     $ 0.66  

Basic shares outstanding

     142,668       142,247  

Diluted shares outstanding

     144,030       143,480  

 

(1)

See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

- More -


RESMED INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited; $ in thousands)

 

     September 30, 2018     June 30, 2018  
ASSETS     
Current assets:     
Cash and cash equivalents    $ 230,188     $ 188,701  
Accounts receivable, net      463,743       483,681  
Inventories      282,555       268,701  
Prepayments and other current assets      111,757       124,634  
  

 

 

   

 

 

 
Total current assets    $ 1,088,243     $ 1,065,717  
Non-current assets:     
Property, plant and equipment, net    $ 381,822     $ 386,550  
Goodwill      1,192,030       1,068,944  
Other intangibles, net      242,193       215,184  
Deferred income taxes and other non-current assets      163,250       327,528  
  

 

 

   

 

 

 
Total non-current assets    $ 1,979,295     $ 1,998,206  
  

 

 

   

 

 

 
Total assets    $ 3,067,538     $ 3,063,923  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY:     
Current liabilities:     
Accounts payable    $ 98,709     $ 92,723  
Accrued expenses      169,465       185,805  
Deferred revenue      64,822       60,828  
Income taxes payable      76,137       160,427  
Short-term debt      11,975       11,466  
  

 

 

   

 

 

 
Total current liabilities    $ 421,108     $ 511,249  
Non-current liabilities:     
Deferred revenue    $ 73,810     $ 71,596  
Deferred income taxes      16,091       13,084  
Other long term liabilities      534       924  
Long-term debt      517,637       269,988  
Long-term income taxes payable      138,102       138,102  
  

 

 

   

 

 

 
Total non-current liabilities    $ 746,174     $ 493,694  
  

 

 

   

 

 

 
Total liabilities    $ 1,167,282     $ 1,004,943  
  

 

 

   

 

 

 
STOCKHOLDERS’ EQUITY:     
Common stock    $ 570     $ 571  
Additional paid-in capital      1,463,669       1,450,821  
Retained earnings      2,296,473       2,432,328  
Treasury stock      (1,623,256     (1,600,412
Accumulated other comprehensive income      (237,200     (224,328
  

 

 

   

 

 

 
Total stockholders’ equity    $ 1,900,256     $ 2,058,980  
  

 

 

   

 

 

 
Total liabilities and stockholders’ equity    $ 3,067,538     $ 3,063,923  
  

 

 

   

 

 

 

- More -


RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited; $ in thousands)

 

     Three Months Ended  
     September 30,
2018
    September 30,
2017
 

Cash flows from operating activities:

    

Net income

   $ 105,737     $ 86,125  

Adjustment to reconcile net income to cash provided by operating activities:

    

Depreciation and amortization

     30,424       29,571  

Stock-based compensation costs

     12,477       11,948  

Impairment of equity investments

     1,711       962  

Changes in fair value of business combination contingent consideration

     (183     —    

Changes in operating assets and liabilities, net of effect of acquisitions:

    

Accounts receivable, net

     20,342       23,317  

Inventories, net

     (15,661     (26,942

Prepaid expenses, net deferred income taxes and other current assets

     (7,703     (15,408

Accounts payable, accrued expenses and other

     (99,025     (15,590
  

 

 

   

 

 

 

Net cash provided by operating activities

   $ 48,119     $ 93,983  

Cash flows from investing activities:

    

Purchases of property, plant and equipment

     (12,994     (16,030

Patent registration costs

     (2,611     (2,242

Business acquisitions, net of cash acquired

     (126,439     —    

Investments in equity investments

     (2,467     (3,225

Proceeds / (Payments) on maturity of foreign currency contracts

     (3,678     6,073  
  

 

 

   

 

 

 

Net cash used in investing activities

   $ (148,189   $ (15,424

Cash flows from financing activities:

    

Proceeds from issuance of common stock, net

     389       3,615  

Purchases of treasury stock

     (19,399     —    

Payment of business combination contingent consideration

     (240     —    

Proceeds from borrowings, net of borrowing costs

     303,000       50,000  

Repayment of borrowings

     (86,133     (110,000

Dividends paid

     (52,793     (49,698
  

 

 

   

 

 

 

Net cash (used in) / provided by financing activities

   $ 144,824     $ (106,083
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

   $ (3,267   $ 16,691  
  

 

 

   

 

 

 

Net increase / (decrease) in cash and cash equivalents

     41,487       (10,833

Cash and cash equivalents at beginning of period

     188,701       821,935  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 230,188     $ 811,102  
  

 

 

   

 

 

 

- More -


RESMED INC AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited; $ in thousands, except for per share amounts)

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

 

     Three Months Ended  
     September 30, 2018      September 30, 2017  

GAAP income from operations

   $ 144,132      $ 112,558  

Amortization of acquired intangible assets (A)

     12,867        11,783  
  

 

 

    

 

 

 

Non-GAAP income from operations

   $ 156,999      $ 124,341  
  

 

 

    

 

 

 

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  
     September 30, 2018      September 30, 2017  

GAAP net income

   $ 105,737      $ 86,125  

Amortization of acquired intangible assets, net of tax (A)

     9,987        8,013  

U.S. tax reform transition impact (A)

     534        —    
  

 

 

    

 

 

 

Non-GAAP net income (A)

   $ 116,258      $ 94,138  
  

 

 

    

 

 

 

Diluted shares outstanding

     144,030        143,480  

GAAP diluted earnings per share

   $ 0.73      $ 0.60  

Non-GAAP diluted earnings per share (A)

   $ 0.81      $ 0.66  

 

(A)

ResMed adjusts for the impact of the amortization of acquired intangibles and impact of U.S. tax reform on income tax expense 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 in 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.

- More -


RESMED INC AND SUBSIDIARIES

Revenue by Product and Region

(Unaudited; $ in thousands, except for per share amounts)

 

     Three Months Ended  
     September 30, 2018      September 30, 2017      % Change     Constant
Currency (A)
 

U.S., Canada and Latin America

          

Devices

   $ 172.4    $ 157.9      9  

Masks

     154.0      138.7      11  
  

 

 

    

 

 

    

 

 

   

Total devices and masks

   $ 326.4    $ 296.6      10  

Software as a Service

     47.5      38.1      25  
  

 

 

    

 

 

    

 

 

   

Total

   $ 373.9    $ 334.7      12  
  

 

 

    

 

 

    

 

 

   

Combined Europe, Asia and other markets

          

Devices

   $ 151.7    $ 128.3      18     20

Masks

     62.7      60.7      3     6
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 214.4    $ 189.0      13     16

Global revenue

          

Devices

   $ 324.1    $ 286.2      13     14

Masks

     216.7      199.4      9     10
  

 

 

    

 

 

    

 

 

   

 

 

 

Total devices and masks

   $ 540.8    $ 485.6      11     12

Software as a Service

     47.5      38.1      25     25
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 588.3    $ 523.7      12     13
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(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.

- End -

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