How did ResMed perform in the quarter ended December 31, 2023?

Revenue rose 12% to $1,162.8 million, or 11% on a constant currency basis. GAAP net income was $208.8 million, and non-GAAP net income was $277.3 million, up 13%.

Why did GAAP operating profit decline while non-GAAP operating profit grew?

GAAP income from operations fell 2% to $275.1 million after the company recorded $64.2 million of restructuring charges, including $28.6 million of employee severance and $33.2 million of intangible asset impairments tied to winding down certain business activities. Non-GAAP income from operations, which excludes these and other items, rose 20% to $365.5 million.

What drove the change in gross margin?

GAAP gross margin decreased 50 basis points to 55.6%, mainly due to costs associated with a field safety notification for masks with magnets. Non-GAAP gross margin increased 10 basis points to 56.9%, primarily due to reduced freight costs and favorable foreign currency movements, partly offset by unfavorable product mix and component cost increases.

What capital return actions did ResMed take?

ResMed resumed its share repurchase program, buying 335,000 shares for $50 million during the quarter, and paid $70.7 million in dividends. The board declared a quarterly cash dividend of $0.48 per share, with a record date of February 8, 2024 and payment on March 14, 2024.

Are there any notable leadership or legal developments?

Rob Douglas, former President and Chief Operating Officer, retired effective January 1, 2024, and will remain as a consultant and advisor to the CEO through 2024. Justin Leong was appointed Chief Product Officer. The company also said it successfully defended a patent infringement complaint brought by New York University.

RMD/RSMDF 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 24, 2024. Cited figures are marked; the original filing is the authoritative source.

ResMed Inc. reported results for the second quarter of fiscal year 2024, the quarter ended December 31, 2023.

Revenue rose 12% to $1,162.8 million^a (11% on a constant currency basis), with growth in devices, masks and accessories, and Software-as-a-Service revenue, which increased 24%. Income from operations declined 2% to $275.1 million because of $64.2 million in restructuring charges, while non-GAAP income from operations rose 20% to $365.5 million. GAAP diluted earnings per share were $1.42, compared with $1.53 a year earlier, and non-GAAP diluted earnings per share were $1.88, up from $1.66.

Gross margin contracted 50 basis points to 55.6%, mainly due to costs tied to a field safety notification for masks with magnets. Operating cash flow was $272.8 million^b for the quarter. The company resumed its share repurchase program, buying 335,000 shares for $50 million, and paid $70.7 million in dividends.

Its board declared a quarterly cash dividend of $0.48^c per share, with a record date of February 8, 2024 and payment on March 14, 2024. The filing also notes management changes, including the retirement of Rob Douglas as President and Chief Operating Officer effective January 1, 2024, and the appointment of Justin Leong as Chief Product Officer. Management also reported that it successfully defended a patent infringement complaint brought by New York University.

02—Key points

Key Highlights

Revenue increased 12% to $1,162.8 million for the quarter, or 11% on a constant currency basis.
GAAP income from operations decreased 2% to $275.1 million, reflecting $64.2 million of restructuring charges; non-GAAP income from operations increased 20% to $365.5 million.
GAAP diluted EPS was $1.42 and non-GAAP diluted EPS was $1.88, compared with $1.53 and $1.66 in the prior-year quarter.
Gross margin was 55.6%, down 50 basis points, mainly due to field safety notification costs for masks with magnets; non-GAAP gross margin was 56.9%.
Software-as-a-Service revenue grew 24%, including incremental revenue from the MEDIFOX DAN acquisition.
Operating cash flow was $272.8 million, and the company repurchased $50 million of stock, resuming its repurchase program.
The board declared a quarterly dividend of $0.48 per share, with an ex-dividend date of February 7, 2024 and payment on March 14, 2024.

03—Questions

Frequently Asked Questions

How did ResMed perform in the quarter ended December 31, 2023?
Revenue rose 12% to $1,162.8 million, or 11% on a constant currency basis. GAAP net income was $208.8 million, and non-GAAP net income was $277.3 million, up 13%.
Why did GAAP operating profit decline while non-GAAP operating profit grew?
GAAP income from operations fell 2% to $275.1 million after the company recorded $64.2 million of restructuring charges, including $28.6 million of employee severance and $33.2 million of intangible asset impairments tied to winding down certain business activities. Non-GAAP income from operations, which excludes these and other items, rose 20% to $365.5 million.
What drove the change in gross margin?
GAAP gross margin decreased 50 basis points to 55.6%, mainly due to costs associated with a field safety notification for masks with magnets. Non-GAAP gross margin increased 10 basis points to 56.9%, primarily due to reduced freight costs and favorable foreign currency movements, partly offset by unfavorable product mix and component cost increases.
What capital return actions did ResMed take?
ResMed resumed its share repurchase program, buying 335,000 shares for $50 million during the quarter, and paid $70.7 million in dividends. The board declared a quarterly cash dividend of $0.48 per share, with a record date of February 8, 2024 and payment on March 14, 2024.
Are there any notable leadership or legal developments?
Rob Douglas, former President and Chief Operating Officer, retired effective January 1, 2024, and will remain as a consultant and advisor to the CEO through 2024. Justin Leong was appointed Chief Product Officer. The company also said it successfully defended a patent infringement complaint brought by New York University.

04—Continue

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