01—Abstract
Summary
Summary of the 10-K filed August 12, 2022. Cited figures are marked; the original filing is the authoritative source.
ResMed Inc. (NYSE: RMD) reported its annual results for the fiscal year ended June 30, 2022 in this Form 10-K, filed August 12, 2022.
Net revenue rose to $3,578.1 milliona from $3,196.8 million, an increase of 12% (13% on a constant currency basis). Gross profit was $2,024.3 million, with gross margin of 56.6% versus 57.5% a year earlier, as higher logistics and manufacturing costs offset favorable product mix and higher average selling prices. Net income increased to $779.4 million, or $5.30 per diluted share, compared with $474.5 million, or $3.24 per diluted share, in fiscal 2021.
Fiscal 2021 results included a $1.70b per diluted share impact from unrecognized tax benefits related to the Australian Taxation Office transfer pricing dispute, which was settled in September 2021. The company operates two segments: Sleep and Respiratory Care, which generated $3,177.3 million in revenue, and Software as a Service (SaaS), which generated $400.8 million. Management attributed growth to recovering core sleep patient flow and increased demand following a recall by competitor Philips.
Supply chain constraints, particularly for semiconductor chips, limited the company's ability to meet all available demand during the year. Operating cash flow fell to $351.1 millionc from $736.7 million, primarily due to the $284.8 million final ATO payment and higher inventory purchases.
Cash and cash equivalents were $273.7 milliond at year end, with $1.4 billion available under the revolving credit facility. Total debt was $780.0 million, and the pending MEDIFOX DAN acquisition carries consideration of $994.2 million, expected to close in fiscal 2023 subject to regulatory clearances.
02—Key points
Key Highlights
- Net revenue of $3,578.1 million, up 12% year over year (13% in constant currency), with Sleep and Respiratory Care at $3,177.3 million and SaaS at $400.8 million.
- Net income of $779.4 million, or $5.30 per diluted share, versus $474.5 million, or $3.24 per diluted share, in fiscal 2021.
- Gross margin of 56.6%, down from 57.5%, due mainly to higher logistics and manufacturing costs, partly offset by product mix and higher average selling prices.
- Operating cash flow of $351.1 million, down from $736.7 million, reflecting the $284.8 million final payment to the Australian Taxation Office and greater inventory purchases.
- Supply constraints, particularly for semiconductor chips, meant the company could not meet all available demand and had to allocate outbound products to customers.
- Pending acquisition of MEDIFOX DAN, with $994.2 million of consideration payable in fiscal 2023, partly funded by the revolving credit facility.
- Total debt of $780.0 million at June 30, 2022, with $1.4 billion available for draw down under the revolving credit facility and $273.7 million of cash.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, ResMed kept $0.22.
- Revenue$3.58B100.0%
- Cost of revenue−$1.55B43.4%
- Gross profit$2.02B56.6%
- Operating costs−$1.02B28.6%
- Operating income$1.00B28.0%
- Interest, other & tax−$221.3M6.2%
- Net income$779.0M21.8%
Where FY2022 revenue went
$3.58B- Cost of revenue: $1.55B, 43% of revenue
- Net income: $779.0M, 22% of revenue
- SG&A: $737.5M, 21% of revenue
- R&D: $253.6M, 7.1% of revenue
- Other operating costs: $32.9M, 0.9% of revenue
- Interest, other & tax: $221.3M, 6.2% of revenue
Kept 22% as net incomeOther operating costs $32.9M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed August 12, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $3.58B$3.20B | +11.9% |
| Cost of Revenue | $1.55B$1.36B | +14.4% |
| Gross Profit | $2.02B$1.84B | +10.1% |
| R&D Expenses | $253.57M$225.28M | +12.6% |
| SG&A Expenses | $737.51M$670.39M | +10.0% |
| Operating Expenses | $1.02B$935.42M | +9.5% |
| Operating Income | $1.00B$903.68M | +10.7% |
| Net Income | $779.00M$474.50M | +64.2% |
| EPS (Basic) | $5.34$3.27 | +63.3% |
| EPS (Diluted) | $5.30$3.24 | +63.6% |
| Shares Outstanding (Basic) | 146.07M145.31M | +0.5% |
| Shares Outstanding (Diluted) | 147.04M146.45M | +0.4% |
05—Questions
Frequently Asked Questions
What drove the increase in ResMed's revenue in fiscal 2022?
Net revenue rose $381.3 million, or 12%, to $3,578.1 million. The filing attributes the Sleep and Respiratory Care increase mainly to higher unit sales of devices and masks, including recovery of core sleep patient flow that the pandemic had affected, and increased demand after a recall by competitor Philips. Software as a Service revenue rose 7% to $400.8 million, driven by growth in the HME and Home Health and Hospice verticals.
Why did gross margin decline in fiscal 2022?
Gross margin was 56.6%, compared with 57.5% in fiscal 2021. The filing states the decrease was due primarily to higher logistics and manufacturing costs, partially offset by favorable product mix as the company sold a higher proportion of higher acuity devices, and by higher average selling prices.
Why did operating cash flow decline significantly?
Operating cash flow was $351.1 million, compared with $736.7 million in fiscal 2021. The filing attributes the $385.6 million decrease primarily to the $284.8 million final payment to the Australian Taxation Office and greater purchases and prepayments of inventory to secure components for rising demand, partly offset by higher operating profit.
What are the main risks related to the pending MEDIFOX DAN acquisition?
The acquisition remains subject to regulatory clearances and other customary closing conditions, and the company expects it to close during fiscal 2023. The filing notes that if the acquisition fails to close, ResMed will not realize the expected benefits. Consideration of $994.2 million is payable in part from funds available under the Revolving Credit Agreement, and the company may incur additional indebtedness to fund it.
What legal proceedings are disclosed in the filing?
The filing discloses a patent infringement complaint filed by New York University in June 2021 concerning AutoSet features of AirSense 10 devices, which is proceeding to discovery. It also discloses a patent suit filed by Cleveland Medical Devices in June 2022 concerning connected devices combined with AirView and ResScan platforms. The company states it is unable to estimate a reasonable range of loss for matters still open.
06—Continue