Progress with New Product Launches Helps ResMed Achieve Double-Digit Growth
ResMed‘s revenue for the second quarter ended December 31, 2014, was $423.0 million, a 10% increase compared to the quarter ended December 31, 2013. Net income was $91.2 million, an increase of 5% compared to the quarter ended December 31, 2013.
“We are pleased to report strong double-digit revenue growth, demonstrating excellent progress with our new product launches,” says Mick Farrell, ResMed CEO, in a release. “We achieved robust commercial performance across all regions, including double-digit growth in the Americas.”
Farrell continues: “During the quarter, we continued to roll out the ResMed Air Solutions Platform with the launch of our AirCurve 10 series of cloud-connected bilevel devices. We also continued the global roll-out of our new life support ventilation system, the Astral platform. We drove consumer awareness of sleep by launching the S+ by ResMed, the world’s first non-contact sleep management solution that helps you monitor and improve your sleep health; we also integrated the S+ with Apple HealthKit….We drove top-line revenue growth in the first half of this fiscal year by launching a strong, innovative portfolio of products and solutions. Longer term, we are focused on our strategy to continue to grow our core sleep apnea market, as well as to invest in high-potential growth opportunities: helping patients with COPD, neuromuscular disease, and cardio-respiratory conditions. Our results this quarter show that our solutions continue to meet the needs of our key customer groups, including patients, physicians, healthcare providers, and payers. We are executing to our mission: improving patient quality-of-life, lowering healthcare costs, and preventing chronic disease progression.”
Analysis of Second Quarter Results
In the second quarter of fiscal year 2015, revenue in the Americas was $231.0 million, a 12% increase over the prior year’s quarter. Revenue in combined Europe and Asia Pacific was $192.0 million, an 8% increase compared to the quarter ended December 31, 2013.
Gross margin in the second quarter was 62.2%, lower than the prior year, mainly due to an unfavorable product mix and declines in average selling prices, which were partially offset by manufacturing and supply chain improvements.
Selling, general, and administrative expenses were $122.5 million for the quarter, a 10% increase over the quarter ended December 31, 2013. SG&A expenses were 29.0% of revenue in the quarter, compared to 29.1% in the quarter ended December 31, 2013, primarily due to higher marketing costs associated with recent product releases and an increase in variable employee compensation costs.
Research and development expenses were $29.3 million for the quarter, or 6.9% of revenue. R&D expenses decreased by 1% compared to the quarter ended December 31, 2013.
Operating profit for the quarter was $109.1 million and cash flow from operations was $106.0 million.
Amortization of acquired intangible assets was $2.3 million ($1.7 million, net of tax) during the quarter. Stock-based compensation costs incurred during the quarter of $11.7 million ($8.1 million, net of tax) consisted of expenses associated with employee equity grants, and the company’s employee stock purchase plan.