01—Abstract
Summary
Summary of the 10-Q filed October 25, 2024. Cited figures are marked; the original filing is the authoritative source.
ResMed Inc. reported net revenue of $1,224.5 milliona for the three months ended September 30, 2024, up from $1,102.3 million a year earlier, an increase of $122.2 million or 11%.
Sleep and Breathing Health revenue reached $1,067.7 millionb, up 11%, with devices at $625.8 million and masks and other at $442.0 million. Residential Care Software revenue was $156.8 million, up 13%. Gross margin expanded to 58.6% from 54.4%, which the company attributed mainly to manufacturing efficiencies, component cost improvements, higher average selling prices, and lower amortization of acquired intangibles in cost of sales.
Income from operations rose to $387.3 millionc from $289.0 million, and net income increased $91.9 million, or 42%, to $311.4 million. Diluted earnings per share were $2.11 compared with $1.49. Non-GAAP diluted earnings per share were $2.20 compared with $1.64.
On the balance sheet, cash and cash equivalents increased to $426.4 milliond from $238.4 million at June 30, 2024. Total assets were $7.2 billion and stockholders' equity was $5.2 billion. Total debt outstanding was $680.0 million across the revolving credit facility, term credit facility and senior notes, and the company stated it was in compliance with its debt covenants.
Cash provided by operating activities was $325.5 million, up $39.3 million from the prior year period. The company repurchased $50.0 million of treasury stock and paid dividends of $0.53 per share totaling $77.9 million. On October 24, 2024, the board declared a quarterly dividend of $0.53 per share payable December 12, 2024.
The filing also discloses ongoing patent litigation, including a New York University suit concerning AirSense 10 AutoSet features, in which the PTAB invalidated the challenged NYU claims and NYU has appealed, and a Cleveland Medical Devices suit with an inter partes review decision expected by May 6, 2025. The company stated it cannot estimate a reasonable range of loss for matters that remain open.
02—Key points
Key Highlights
- Net revenue rose 11% to $1,224.5 million, with Sleep and Breathing Health up 11% to $1,067.7 million and Residential Care Software up 13% to $156.8 million.
- Gross margin improved to 58.6% from 54.4%, driven by manufacturing efficiencies, component cost improvements, higher average selling prices, and lower amortization of acquired intangibles in cost of sales.
- Net income increased $91.9 million, or 42%, to $311.4 million; diluted EPS was $2.11 versus $1.49, and non-GAAP diluted EPS was $2.20 versus $1.64.
- Cash and cash equivalents rose to $426.4 million from $238.4 million at June 30, 2024, while total debt outstanding was $680.0 million.
- Operating cash flow was $325.5 million, up $39.3 million from the prior year period, and the company had $1,926.4 million in cash and available revolving credit liquidity.
- Shareholder returns included $50.0 million of share repurchases in the quarter and $77.9 million in dividends paid, with a $0.53 per share dividend declared on October 24, 2024.
- Litigation remains active, including the NYU patent case where PTAB invalidated the challenged claims and NYU has appealed, and the Cleveland Medical Devices patent suits, with a PTAB decision expected by May 6, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, ResMed kept $0.25.
- Revenue$1.22B100.0%
- Cost of revenue−$507.3M41.4%
- Gross profit$717.2M58.6%
- Operating costs−$329.9M26.9%
- Operating income$387.3M31.6%
- Interest, other & tax−$76.0M6.2%
- Net income$311.4M25.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed October 25, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $1.22B$1.10B | +11.1% |
| Cost of Revenue | $507.29M$502.26M | +1.0% |
| Gross Profit | $717.22M$600.06M | +19.5% |
| R&D Expenses | $79.52M$75.71M | +5.0% |
| SG&A Expenses | $238.98M$222.87M | +7.2% |
| Operating Expenses | $329.91M$311.06M | +6.1% |
| Operating Income | $387.31M$289.00M | +34.0% |
| Net Income | $311.36M$219.42M | +41.9% |
| EPS (Basic) | $2.12$1.49 | +42.3% |
| EPS (Diluted) | $2.11$1.49 | +41.6% |
| Shares Outstanding (Basic) | 146.86M147.07M | −0.1% |
| Shares Outstanding (Diluted) | 147.60M147.49M | +0.1% |
05—Questions
Frequently Asked Questions
How did ResMed's revenue and profitability perform in the quarter ended September 30, 2024?
Net revenue increased 11% to $1,224.5 million from $1,102.3 million. Gross profit rose to $717.2 million from $600.1 million, and income from operations rose to $387.3 million from $289.0 million. Net income was $311.4 million compared with $219.4 million, and diluted EPS was $2.11 compared with $1.49.
What drove the improvement in gross margin?
The company attributed the increase in gross margin, to 58.6% from 54.4%, primarily to manufacturing efficiencies and component cost improvements, an increase in average selling prices, and a reduction in amortization of acquired intangibles relating to cost of goods sold as assets became fully amortized.
How strong is ResMed's liquidity and debt position?
Cash and cash equivalents were $426.4 million at September 30, 2024, up from $238.4 million at June 30, 2024. Total debt outstanding was $680.0 million under the revolving credit facility, term credit facility and senior notes, and the company stated it was in compliance with its debt covenants. As of September 30, 2024, $1,500.0 million was available under the revolving credit facility, and the company believes its liquidity is sufficient for the next 12 months and beyond.
What is the company doing with excess capital?
During the quarter the company repurchased 221,996 shares for $50.0 million and paid dividends of $0.53 per share totaling $77.9 million. Since 2014 it has repurchased a total of 8.2 million shares for $612.7 million, and 11.8 million shares remained available under the authorized program at September 30, 2024. On October 24, 2024, the board declared a $0.53 per share dividend payable December 12, 2024.
What legal risks does the filing highlight?
The filing describes patent litigation with New York University, in which the PTAB invalidated each challenged claim of the NYU patents asserted against ResMed and NYU has appealed to the Federal Circuit, with appeals not expected to be resolved before March 2025. It also describes a Cleveland Medical Devices patent suit that is stayed pending a PTAB inter partes review decision expected by May 6, 2025. The company stated it is unable to make a reasonable estimate of loss or range of losses for matters that remain open.
06—Continue