ResMed Inc. Announces Results for the Third Quarter of Fiscal Year 2022
April 28, 2022
- Year-over-year revenue grows 12%, operating profit up 5%, non-GAAP operating profit up 5%
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, April 28, 2022 (GLOBE NEWSWIRE) -- ResMed Inc. (NYSE: RMD, ASX: RMD) today announced results for its quarter ended March 31, 2022.
Third Quarter 2022 Highlights
All comparisons are to the prior year period
- Revenue increased by 12% to $864.5 million; up 14% on a constant currency basis
- Gross margin contracted 140 bps to 56.8%; non-GAAP gross margin contracted 150 bps to 58.1%
- Income from operations increased 5%; non-GAAP operating profit up 5%
- Diluted earnings per share of $1.22; non-GAAP diluted earnings per share of $1.32
“Our third-quarter results reflect strong performance across our business, resulting in double-digit top-line revenue growth including extraordinary demand in our sleep and respiratory care business segment as well as solid high-single-digit growth in our software-as-a-service segment,” said Mick Farrell, ResMed CEO. “I am proud of our global team’s ability to pivot and drive continued growth while ongoing supply chain disruptions and a competitor’s recall continue to limit our ability to meet the incredible demand for our products. We remain focused on delivering products, software, and services for patients, working closely with our supply chain partners as well as physicians, providers, and beyond, to prioritize care for patients who most need it.
“While the current industry and macroeconomic environment remain uncertain, our long-term strategy allows us to keep our focus on helping 250 million lives in 2025. Our end-market demand from patients and providers remains strong, and our digital health technologies continue to deliver value. We are supporting patients with the world-leading portfolio of sleep apnea therapy, respiratory care therapy, and digital health solutions they need, as we deliver value for all of our customers.”
Financial Results and Operating Metrics
Unaudited; $ in millions, except for per share amounts
| Three Months Ended | |||||||||||||
| March 31, 2022 | March 31, 2021 | % Change | Constant Currency (A) | ||||||||||
| Revenue | $ | 864.5 | $ | 768.8 | 12 | % | 14 | % | |||||
| Gross margin (B) | 56.8 | % | 58.2 | % | (2 | ) | |||||||
| Non-GAAP gross margin (B) | 58.1 | % | 59.6 | % | (3 | ) | |||||||
| Selling, general, and administrative expenses | 182.4 | 160.4 | 14 | 17 | |||||||||
| Research and development expenses | 66.8 | 55.9 | 19 | 22 | |||||||||
| Income from operations | 234.3 | 223.4 | 5 | ||||||||||
| Non-GAAP income from operations (B) | 253.0 | 241.8 | 5 | ||||||||||
| Net income (loss) | 179.0 | (78.5 | ) | NM | |||||||||
| Non-GAAP net income (B) | 193.3 | 190.4 | 2 | ||||||||||
| Diluted earnings (loss) per share | $ | 1.22 | $ | (0.54 | ) | NM | |||||||
| Non-GAAP diluted earnings per share (B) | $ | 1.32 | $ | 1.30 | 2 | ||||||||
NM Not meaningful
| Nine Months Ended | |||||||||||||
| March 31, 2022 | March 31, 2021 | % Change | Constant Currency (A) | ||||||||||
| Revenue | $ | 2,663.4 | $ | 2,320.7 | 15 | % | 15 | % | |||||
| Gross margin (B) | 56.4 | % | 58.1 | % | (3 | ) | |||||||
| Non-GAAP gross margin (B) | 57.6 | % | 59.8 | % | (4 | ) | |||||||
| Selling, general, and administrative expenses | 544.5 | 488.9 | 11 | 13 | |||||||||
| Research and development expenses | 189.3 | 165.4 | 14 | 15 | |||||||||
| Income from operations | 744.9 | 662.0 | 13 | ||||||||||
| Non-GAAP income from operations (B) | 801.3 | 733.4 | 9 | ||||||||||
| Net income | 584.4 | 279.4 | 109 | ||||||||||
| Non-GAAP net income (B) | 631.5 | 582.2 | 8 | ||||||||||
| Diluted earnings per share | $ | 3.97 | $ | 1.91 | 108 | ||||||||
| Non-GAAP diluted earnings per share (B) | $ | 4.30 | $ | 3.98 | 8 | ||||||||
(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 Third Quarter Results
All comparisons are to the prior year period unless otherwise noted
- Revenue grew by 14 percent on a constant currency basis, driven by increased demand for our sleep and respiratory care devices and increased demand following a recent product recall by one of our competitors.
- Revenue in the U.S., Canada, and Latin America, excluding software-as-a-service, grew by 18 percent, primarily due to the factors discussed above and recovery of core sleep patient flow that was previously impacted by COVID-19.
- Revenue in Europe, Asia, and other markets grew by 11 percent on a constant currency basis, primarily due to the factors discussed above.
- Software-as-a-service revenue increased by 8 percent, due to continued growth in our Durable Medical Equipment category and stabilizing patient flow in out-of-hospital care settings.
- Gross margin decreased by 140 basis points and non-GAAP gross margin decreased by 150 basis points, mainly due to higher freight and manufacturing costs, partially offset by favorable product mix changes and increase in average selling prices.
- Selling, general, and administrative expenses increased by 17 percent on a constant currency basis. SG&A expenses increased to 21.1 percent of revenue in the quarter, compared with 20.9 percent in the same period of the prior year. These changes in SG&A expenses were mainly due to increases in employee-related expenses.
- Income from operations increased by 5 percent and non-GAAP income from operations increased by 5 percent.
- Net income for the quarter was $179.0 million and diluted earnings per share was $1.22. Non-GAAP net income grew by 2 percent and non-GAAP diluted earnings per share grew by 2 percent, predominantly attributable to strong sales, partially offset by higher operating expenses.
- Operating cash flow for the quarter was $117.4 million, compared to net income in the current quarter of $179.0 million and non-GAAP net income of $193.3 million. During the quarter we paid $61.4 million in dividends.
Other Business and Operational Highlights
- Announced appointment of Urvashi Tyagi as new Chief Technology Officer and Bobby Ghoshal transitions to be President of ResMed’s software-as-a-service business segment full-time. Tyagi leads ResMed’s digital health technology team, driving innovation and adoption of world-leading cloud-based digital health platforms and investments in emerging technologies.
- Published 2022 Global Sleep Surveys as part of National Sleep Awareness Week (March 13-19) and World Sleep Day (March 18). The surveys, conducted in the first quarter of the calendar year, asked nearly 25,000 respondents in 12 countries what’s keeping them up at night; the results aim to build awareness of the critical role good sleep plays in physical and mental health.
Dividend program
The ResMed board of directors today declared a quarterly cash dividend of $0.42 per share. The dividend will have a record date of May 12, 2022, payable on June 16, 2022. 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 May 11, 2022, 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 May 11, 2022, through May 12, 2022, inclusive.
Webcast details
ResMed will discuss its third-quarter fiscal year 2022 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 “Q3 2022 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 +1 877-660-6853 (U.S.) or +1 201-612-7415 (outside U.S.) and entering the passcode 13727876. The telephone replay will be available until May 12, 2022.
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.
Condensed Consolidated Statements of Operations
(Unaudited; $ in thousands, except for per share amounts)