filings.toolsResMed 10-Q 2023-09-30
Filed 2023-10-27. 8 sections, 155K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2023
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______to _______
Commission File Number: 001-15317
ResMed Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
98-0152841
(I.R.S. Employer Identification No.)
9001 Spectrum Center Blvd.
San Diego, CA 92123
United States of America
(Address of principal executive offices, including zip code)
(858) 836-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $0.004 per share | RMD | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | x | Accelerated Filer | o | |||||||||||
| Non-Accelerated Filer | o | Smaller Reporting Company | o | |||||||||||
| Emerging Growth Company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
At October 23, 2023 there were 147,091,910 shares of Common Stock ($0.004 par value) outstanding. This number excludes 41,836,234 shares held by the registrant as treasury shares.
RESMED INC. AND SUBSIDIARIES
INDEX
| PART I – FINANCIAL INFORMATION | Item 1 |
Item 1. Financial Statements
RESMED INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(In US$ and in thousands, except share and per share data)
| September 30, 2023 | June 30, 2023 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 209,100 | $ | 227,891 | |||||||
| Accounts receivable, net of allowances of $20,532 and $23,603 at September 30, 2023 and June 30, 2023, respectively | 692,388 | 704,909 | |||||||||
| Inventories (note 3) | 958,233 | 998,012 | |||||||||
| Prepaid expenses and other current assets (note 3) | 444,864 | 437,018 | |||||||||
| Total current assets | 2,304,585 | 2,367,830 | |||||||||
| Non-current assets: | |||||||||||
| Property, plant and equipment, net (note 3) | 533,985 | 537,856 | |||||||||
| Operating lease right-of-use assets | 123,416 | 127,955 | |||||||||
| Goodwill (note 4) | 2,812,142 | 2,770,299 | |||||||||
| Other intangible assets, net (note 3) | 563,278 | 552,341 | |||||||||
| Deferred income taxes | 138,271 | 132,974 | |||||||||
| Prepaid taxes and other non-current assets | 265,109 | 262,453 | |||||||||
| Total non-current assets | 4,436,201 | 4,383,878 | |||||||||
| Total assets | $ | 6,740,786 | $ | 6,751,708 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 177,048 | $ | 150,756 | |||||||
| Accrued expenses | 348,263 | 365,660 | |||||||||
| Operating lease liabilities, current | 21,795 | 21,919 | |||||||||
| Deferred revenue | 146,718 | 138,072 | |||||||||
| Income taxes payable | 67,073 | 72,224 | |||||||||
| Short-term debt, net (note 7) | 9,905 | 9,902 | |||||||||
| Total current liabilities | 770,802 | 758,533 | |||||||||
| Non-current liabilities: | |||||||||||
| Deferred revenue | 121,492 | 119,186 | |||||||||
| Deferred income taxes | 87,672 | 90,650 | |||||||||
| Operating lease liabilities, non-current | 112,448 | 116,853 | |||||||||
| Other long-term liabilities | 34,328 | 68,166 | |||||||||
| Long-term debt, net (note 7) | 1,351,511 | 1,431,234 | |||||||||
| Long-term income taxes payable | 12,157 | 37,183 | |||||||||
| Total non-current liabilities | 1,719,608 | 1,863,272 | |||||||||
| Total liabilities | 2,490,410 | 2,621,805 | |||||||||
| Commitments and contingencies (note 9) | |||||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued | — | — | |||||||||
| Common stock, $0.004 par value, 350,000,000 shares authorized; 188,921,316 issued and 147,085,082 outstanding at September 30, 2023 and 188,900,583 issued and 147,064,349 outstanding at June 30, 2023 | 588 | 588 | |||||||||
| Additional paid-in capital | 1,791,351 | 1,772,083 | |||||||||
| Retained earnings | 4,401,841 | 4,253,016 | |||||||||
| Treasury stock, at cost, 41,836,234 shares at September 30, 2023 and June 30, 2023 | (1,623,256) | (1,623,256) | |||||||||
| Accumulated other comprehensive loss | (320,148) | (272,528) | |||||||||
| Total stockholders’ equity | 4,250,376 | 4,129,903 | |||||||||
| Total liabilities and stockholders’ equity | $ | 6,740,786 | $ | 6,751,708 |
See the accompanying notes to the unaudited condensed consolidated financial statements.
| PART I – FINANCIAL INFORMATION | Item 1 |
RESMED INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(In US$ and in thousands, except per share data)
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Net revenue - Sleep and Respiratory Care products | $ | 963,037 | $ | 844,443 | |||||||||||||||||||
| Net revenue - Software as a Service | 139,284 | 105,851 | |||||||||||||||||||||
| Net revenue | 1,102,321 | 950,294 | |||||||||||||||||||||
| Cost of sales - Sleep and Respiratory Care products | 444,460 | 363,844 | |||||||||||||||||||||
| Cost of sales - Software as a Service | 48,893 | 39,266 | |||||||||||||||||||||
| Cost of sales (exclusive of amortization shown separately below) | 493,353 | 403,110 | |||||||||||||||||||||
| Amortization of acquired intangible assets - Sleep and Respiratory Care products | 1,916 | 1,228 | |||||||||||||||||||||
| Amortization of acquired intangible assets - Software as a Service | 6,992 | 5,146 | |||||||||||||||||||||
| Amortization of acquired intangible assets | 8,908 | 6,374 | |||||||||||||||||||||
| Total cost of sales | 502,261 | 409,484 | |||||||||||||||||||||
| Gross profit | 600,060 | 540,810 | |||||||||||||||||||||
| Selling, general, and administrative | 222,874 | 193,933 | |||||||||||||||||||||
| Research and development | 75,710 | 63,188 | |||||||||||||||||||||
| Amortization of acquired intangible assets | 12,479 | 7,950 | |||||||||||||||||||||
| Total operating expenses | 311,063 | 265,071 | |||||||||||||||||||||
| Income from operations | 288,997 | 275,739 | |||||||||||||||||||||
| Other income (loss), net: | |||||||||||||||||||||||
| Interest (expense) income, net | (14,957) | (7,134) | |||||||||||||||||||||
| Loss attributable to equity method investments (note 5) | (3,895) | (2,028) | |||||||||||||||||||||
| Gain (loss) on equity investments (note 5) | (602) | (3,280) | |||||||||||||||||||||
| Other, net | 2,648 | (1,504) | |||||||||||||||||||||
| Total other income (loss), net | (16,806) | (13,946) | |||||||||||||||||||||
| Income before i |
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Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports made pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.
As required by Rule 13a-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023.
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| PART II – OTHER INFORMATION | Item 1-6 |
RESMED INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
We are involved in various legal proceedings, claims, investigations and litigation that arise in the ordinary course of our business. We investigate these matters as they arise, and accrue estimates for resolution of legal and other contingencies in accordance with Accounting Standard Codification Topic 450, “Contingencies”. See note 9 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Litigation is inherently uncertain. Accordingly, we cannot predict with certainty the outcome of these matters. But we do not expect the outcome of these matters to have a material adverse effect on our consolidated financial statements when taken as a whole.
Item 1A. Risk Factors
The discussion of our business and operations should be read together with the risk factors contained in our annual report on Form 10-K for the fiscal year ended June 30, 2023, which was filed with the SEC and describe various material risks and uncertainties to which we are or may become subject. As of September 30, 2023, there have been no further material changes to such risk factors.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Purchases of equity securities. On February 21, 2014, our board of directors approved our current share repurchase program, authorizing us to acquire up to an aggregate of 20.0 million shares of our common stock. The program allows us to repurchase shares of our common stock from time to time for cash in the open market, or in negotiated or block transactions, as market and business conditions warrant and subject to applicable legal requirements. We are authorized to continue repurchasing shares through June 30, 2024, provided that the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors. All share repurchases after February 21, 2014 have been executed under this program.
We suspended our share repurchase program in fiscal year 2019. As a result, we did not repurchase any shares during the three months ended September 30, 2023. However, we recently announced in October 2023 that our board of directors has elected to reactivate and resume share repurchases pursuant to the share repurchase program as the circumstances allow. Since approval of the share repurchase program in 2014 through September 30, 2023, we have repurchased a total of 7.1 million shares under this repurchase program for an aggregate of $413 million. At September 30, 2023, 12.9 million additional shares of common stock can be repurchased under the approved share repurchase program.
Item 3. Defaults Upon Senior Securities
None
Item 4 Mine Safety Disclosures
None
Item 5. Other Information
During the quarterly period ended September 30, 2023, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement, and/or any non-Rule 10b5-1 trading arrangement (as such terms are defined pursuant to Item 408(a) of Regulation S-K).
| PART II – OTHER INFORMATION | Item 1-6 |
RESMED INC. AND SUBSIDIARIES
Item 6. Exhibits
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
| * | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
| PART II – OTHER INFORMATION | Signatures |
RESMED INC. AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
October 26, 2023
| ResMed Inc. | |||||
| /s/ MICHAEL J. FARRELL | |||||
| Michael J. Farrell | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) |
| /s/ BRETT A. SANDERCOCK | |||||
| Brett A. Sandercock | |||||
| Chief Financial Officer | |||||
| (Principal Financial Officer) |