01—Abstract
Summary
Summary of the 10-Q filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
ResMed Inc. reported net revenue of $1,196,980 thousanda ($1.2 billion) for the three months ended March 31, 2024, up 7% from $1,116,898 thousand a year earlier (also 7% on a constant currency basis).
Growth was driven by Sleep and Respiratory Care, where devices rose 5% and masks and other rose 10%, and by Software as a Service (SaaS) revenue of $147,957 thousandb, up 8%. Gross margin improved to 57.9% from 55.3%, which the company attributed mainly to lower freight costs and manufacturing cost improvements. Net income was $300,492 thousand, or $2.04 diluted EPS, compared with $1.58 in the prior-year quarter, an increase of 29%.
For the nine months ended March 31, 2024, net revenue was $3,462,102 thousandc, up 12% (11% on a constant currency basis), and diluted EPS was $4.94. Gross margin was 56.0% versus 56.1%, reflecting $14.3 million of field safety notification expenses for masks with magnets and Astral devices. The company recorded $64.2 million of restructuring charges in the nine-month period under a plan to increase operational efficiency, and that restructuring was substantially complete at March 31, 2024.
Cash provided by operating activities was $961.1 milliond for the nine months, compared with $455.9 million a year earlier, mainly due to lower cash outflows on inventory purchases. At March 31, 2024, cash and cash equivalents were $237.9 million, total assets were $6.8 billion, and stockholders' equity was $4.6 billion.
Total debt outstanding under the revolving credit facility, term credit agreement and senior notes was $1,010.0 million, down from $1,441,136 thousand in total debt at June 30, 2023, and the company stated it was in compliance with its debt covenants. The Board declared a quarterly dividend of $0.48 per share on April 25, 2024.
02—Key points
Key Highlights
- Net revenue rose 7% to $1,196,980 thousand in the quarter; for the nine months, revenue rose 12% to $3,462,102 thousand.
- Quarterly gross margin increased to 57.9% from 55.3%, driven mainly by reduced freight and manufacturing cost improvements.
- Quarterly net income of $300,492 thousand and diluted EPS of $2.04 compared with $1.58 a year earlier, an increase of 29%.
- Nine-month operating cash flow of $961.1 million, up from $455.9 million, primarily due to lower inventory purchase outflows.
- Restructuring expenses of $64.2 million were recorded in the nine months, including $28.6 million of employee severance and $33.2 million of intangible asset impairments.
- Total debt outstanding fell to $1,010.0 million, with $1,175.0 million available under the revolving credit facility at March 31, 2024.
- Non-GAAP diluted EPS was $2.13 for the quarter versus $1.68 a year earlier, and the company declared a $0.48 per share quarterly dividend.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, ResMed kept $0.25.
- Revenue$1.20B100.0%
- Cost of revenue−$504.2M42.1%
- Gross profit$692.8M57.9%
- Operating costs−$318.2M26.6%
- Operating income$374.6M31.3%
- Interest, other & tax−$74.1M6.2%
- Net income$300.5M25.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed April 26, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.20B$1.12B | +7.2% |
| Cost of Revenue | $504.20M$499.15M | +1.0% |
| Gross Profit | $692.78M$617.75M | +12.1% |
| R&D Expenses | $77.07M$76.44M | +0.8% |
| SG&A Expenses | $229.92M$228.46M | +0.6% |
| Operating Expenses | $318.20M$317.08M | +0.4% |
| Operating Income | $374.58M$300.67M | +24.6% |
| Net Income | $300.49M$232.50M | +29.2% |
| EPS (Basic) | $2.04$1.58 | +29.1% |
| EPS (Diluted) | $2.04$1.58 | +29.1% |
| Shares Outstanding (Basic) | 146.96M146.91M | 0.0% |
| Shares Outstanding (Diluted) | 147.45M147.40M | 0.0% |
05—Questions
Frequently Asked Questions
What drove ResMed's revenue growth in the quarter ended March 31, 2024?
Net revenue increased $80.1 million, or 7%, to $1,196,980 thousand. Sleep and Respiratory Care revenue rose 7% to $1,049,023 thousand, with masks and other up 10% and devices up 5%. SaaS revenue rose 8% to $147,957 thousand, mainly from growth in the HME and MEDIFOX DAN verticals. The company attributed the device and mask increases primarily to increased demand and unit sales.
Why did gross margin improve in the quarter, but decline slightly for the nine months?
Quarterly gross margin rose to 57.9% from 55.3%, primarily due to reduced freight costs and manufacturing cost improvements. For the nine months, gross margin was 56.0% versus 56.1%, reflecting $14.3 million of combined field safety notification expenses for masks with magnets and Astral devices and higher amortization of acquired intangible assets, partly offset by a favorable SaaS impact and the same freight and manufacturing improvements.
What was the restructuring plan and what did it cost?
During the nine months ended March 31, 2024, ResMed recorded $64.2 million of restructuring charges tied to an evaluation of existing operations to increase operational efficiency, decrease costs and increase profitability. The charges comprised $28.6 million of employee severance and other one-time termination benefits, $33.2 million of intangible asset impairments associated with winding down certain business activities, and $2.4 million of other miscellaneous asset impairments. The plan affected both segments and was substantially complete at March 31, 2024. No restructuring expenses were recorded in the three months ended March 31, 2024.
How strong is ResMed's liquidity and debt position?
At March 31, 2024, cash and cash equivalents were $237.9 million and $1,175.0 million was available under the revolving credit facility, for combined liquidity of $1,412.9 million. Total debt outstanding under the revolving credit agreement, term credit agreement and senior notes was $1,010.0 million, compared with total debt of $1,441,136 thousand at June 30, 2023. The company stated it was in compliance with its debt covenants and believes its liquidity sources will be sufficient for the next 12 months and beyond.
What is ResMed's capital return activity?
During the three months ended March 31, 2024, ResMed paid cash dividends of $0.48 per share totaling $70.5 million. On April 25, 2024, the board declared a further $0.48 per share dividend, payable June 13, 2024. During the nine months, the company repurchased 596,188 shares at a cost of $100.0 million. At March 31, 2024, 12.3 million additional shares remained available for repurchase under the program, which authorizes repurchases through June 30, 2024.
06—Continue