ResMed reports record-breaking revenues continue

ResMed Inc. announced revenue and income results for the fiscal quarter which ended on June 30, 2008. Revenue for the quarter was a record $235.2 million, a 23 percent increase over the fiscal quarter which ended one year ago, on June 30, 2007.

Income from operations and net income for the current quarter were $37.0 million and $29.6 million, respectively. Diluted earnings per share for the quarter ended June 30, 2008 was $0.38. For the quarter ended June 30, 2008, an additional expense of $3.1 million has been recognized as a charge to cost of sales in relation to the voluntary recall announced in April 2007 related to an earlier series of S8 flow generators.

ResMed, in a press release, said it did not expect any further significant costs in relation to this recall.

Excluding product recall expenses, diluted earnings per share was $0.40, an increase of 14 percent compared to the quarter ended June 30, 2007. Excluding product recall expenses, gross margin was 58.3 percent, mainly as the result of encouraging growth in the U.S. market.

Selling, general, and administrative expenses (SG&A) costs were $77.4 million for the quarter, an increase of $12.2 million, or 19 percent, over the same period in fiscal 2007. SG&A costs were 33 percent of revenue in the June quarter, compared to 34 percent in the same period in fiscal 2007.

The increase in SG&A was primarily due to the addition of selling and administration personnel and related expenses to support sales growth. The increase in SG&A was also due to the net appreciation of international currencies against the U.S. dollar.

Research and development (R&D) expenses during the quarter were $17.6 million or approximately seven percent of revenue. R&D expenses increased 24 percent year–over–year.

The increase in research and development outlays reflects the continuing commitment to innovation within our product portfolio, as well as an ongoing commitment to clinical research and product development. The increase in R&D was also due to the net appreciation of international currencies against the U.S. dollar.

Amortization of acquired intangibles of $2.1 million, incurred during the quarter ended June 30, 2008, consisted of amortization of acquired intangible assets associated with our acquisitions of Resprecare, Hoefner, Saime, PulmoMed, and PolarMed. Stock-based compensation costs incurred during the quarter ended June 30, 2008, of $5.3 million, consisted of expenses associated with stock options granted to employees and the employee stock purchase plan.

For the year ended June 30, 2008, revenue was a record $835.4 million, an increase of 17 percent over the $716.3 million for the year ended June 30, 2007. For the year ended June 30, 2008, income from operations and net income were $143.0 million and $110.3 million, respectively. Generally accepted accounting principles (GAAP) diluted earnings per share for the year ended June 30, 2008 was $1.40 per diluted share.

Inventory was $158.3 million as of June 30, 2008, a decrease of $11.2 million compared to the March 31, 2008 level of $169.5 million. Accounts receivable days sales outstanding, at 72 days, decreased one day when compared to 73 days for the March 31, 2008 quarter.

Kieran T. Gallahue, ResMed’s chief executive officer, said that "in the fourth quarter of fiscal 2008, overall sales outside of the Americas totaled $123.0 million, a 32 percent increase over the prior year quarter. Americas’ sales were $112.2 million, an increase of 14 percent over the prior year quarter. Operating cash flow for the June quarter was a record $56.8 million and we repurchased $51.7 million in stock, which puts our fiscal year total at $99.5 million representing 2.6 million shares."

Gallahue continued, "We were pleased with the strong and balanced growth achieved by our global operations this past quarter, particularly the accelerated growth experienced in the U.S. market. We are encouraged by the traction gained from our recent product releases, the S8 II series of flow generators and the Swift LT nasal pillows mask. Our industry received positive signals that it is poised for continued growth."

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