QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
x | Accelerated Filer | o | ||||||||||||
Non-Accelerated Filer | o | Smaller Reporting Company | ||||||||||||
Emerging Growth Company |
Part I | ||||||||
Item 1 | ||||||||
PART I – FINANCIAL INFORMATION | Item 1 |
September 30, 2023 | June 30, 2023 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowances of $ | |||||||||||
Inventories (note 3) | |||||||||||
Prepaid expenses and other current assets (note 3) | |||||||||||
Total current assets | |||||||||||
Non-current assets: | |||||||||||
Property, plant and equipment, net (note 3) | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill (note 4) | |||||||||||
Other intangible assets, net (note 3) | |||||||||||
Deferred income taxes | |||||||||||
Prepaid taxes and other non-current assets | |||||||||||
Total non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Operating lease liabilities, current | |||||||||||
Deferred revenue | |||||||||||
Income taxes payable | |||||||||||
Short-term debt, net (note 7) | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Deferred revenue | |||||||||||
Deferred income taxes | |||||||||||
Operating lease liabilities, non-current | |||||||||||
Other long-term liabilities | |||||||||||
Long-term debt, net (note 7) | |||||||||||
Long-term income taxes payable | |||||||||||
Total non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (note 9) | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Net revenue - Sleep and Respiratory Care products | $ | $ | |||||||||
Net revenue - Software as a Service | |||||||||||
Net revenue | |||||||||||
Cost of sales - Sleep and Respiratory Care products | |||||||||||
Cost of sales - Software as a Service | |||||||||||
Cost of sales (exclusive of amortization shown separately below) | |||||||||||
Amortization of acquired intangible assets - Sleep and Respiratory Care products | |||||||||||
Amortization of acquired intangible assets - Software as a Service | |||||||||||
Amortization of acquired intangible assets | |||||||||||
Total cost of sales | |||||||||||
Gross profit | |||||||||||
Selling, general, and administrative | |||||||||||
Research and development | |||||||||||
Amortization of acquired intangible assets | |||||||||||
Total operating expenses | |||||||||||
Income from operations | |||||||||||
Other income (loss), net: | |||||||||||
Interest (expense) income, net | ( | ( | |||||||||
Loss attributable to equity method investments (note 5) | ( | ( | |||||||||
Gain (loss) on equity investments (note 5) | ( | ( | |||||||||
Other, net | ( | ||||||||||
Total other income (loss), net | ( | ( | |||||||||
Income before income taxes | |||||||||||
Income taxes | |||||||||||
Net income | $ | $ | |||||||||
Basic earnings per share (note 8) | $ | $ | |||||||||
Diluted earnings per share (note 8) | $ | $ | |||||||||
Dividend declared per share | $ | $ | |||||||||
Basic shares outstanding (000's) | |||||||||||
Diluted shares outstanding (000's) |
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive income (loss), net of taxes: | |||||||||||
Unrealized losses on designated hedging instruments | ( | ||||||||||
Foreign currency translation (loss) gain adjustments | ( | ( | |||||||||
Comprehensive income | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Common stock issued on exercise of options | — | — | — | — | — | |||||||||||||||||||||
Common stock issued on vesting of restricted stock units, net of shares withheld for tax | — | ( | — | — | — | — | ( | |||||||||||||||||||
Stock-based compensation costs | — | — | — | — | — | — | ||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Dividends declared ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Balance, September 30, 2023 | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||
PART I – FINANCIAL INFORMATION | Item 1 |
Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Common stock issued on exercise of options | — | — | — | — | — | |||||||||||||||||||||
Common stock issued on vesting of restricted stock units, net of shares withheld for tax | — | ( | — | — | — | — | ( | |||||||||||||||||||
Stock-based compensation costs | — | — | — | — | — | — | ||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||
Dividends declared ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Balance, September 30, 2022 | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustment to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of right-of-use assets | |||||||||||
Stock-based compensation costs | |||||||||||
Loss attributable to equity method investments (note 5) | |||||||||||
(Gain) loss on equity investments (note 5) | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventories | ( | ||||||||||
Prepaid expenses, net deferred income taxes and other current assets | ( | ( | |||||||||
Accounts payable, accrued expenses, income taxes payable and other | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Patent registration and acquisition costs | ( | ( | |||||||||
Business acquisitions, net of cash acquired | ( | ( | |||||||||
Purchases of investments (note 5) | ( | ( | |||||||||
Proceeds from exits of investments (note 5) | |||||||||||
(Payments) / proceeds on maturity of foreign currency contracts | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of common stock, net | |||||||||||
Taxes paid related to net share settlement of equity awards | ( | ( | |||||||||
Payments of business combination contingent consideration | ( | ||||||||||
Proceeds from borrowings, net of borrowing costs | |||||||||||
Repayment of borrowings | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash | ( | ( | |||||||||
Net decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Income taxes paid, net of refunds | $ | $ | |||||||||
Interest paid | $ | $ | |||||||||
Fair value of assets acquired, excluding cash | $ | $ | |||||||||
Liabilities assumed | ( | ( | |||||||||
Goodwill on acquisition | |||||||||||
Deferred payments | ( | ||||||||||
Fair value of contingent consideration | $ | ( | |||||||||
Cash paid for acquisitions | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
U.S., Canada and Latin America | |||||||||||
Devices | $ | $ | |||||||||
Masks and other | |||||||||||
Total U.S., Canada and Latin America | $ | $ | |||||||||
Combined Europe, Asia and other markets | |||||||||||
Devices | $ | $ | |||||||||
Masks and other | |||||||||||
Total Combined Europe, Asia and other markets | $ | $ | |||||||||
Global revenue | |||||||||||
Total Devices | $ | $ | |||||||||
Total Masks and other | |||||||||||
Total Sleep and Respiratory Care | $ | $ | |||||||||
Software as a Service | |||||||||||
Total | $ | $ |
September 30, 2023 | June 30, 2023 | Balance sheet caption | |||||||||||||||
Contract assets | |||||||||||||||||
Accounts receivable, net | $ | $ | Accounts receivable, net | ||||||||||||||
Unbilled revenue, current | Prepaid expenses and other current assets | ||||||||||||||||
Unbilled revenue, non-current | Prepaid taxes and other non-current assets | ||||||||||||||||
Contract liabilities | |||||||||||||||||
Deferred revenue, current | ( | ( | Deferred revenue (current liabilities) | ||||||||||||||
Deferred revenue, non-current | ( | ( | Deferred revenue (non-current liabilities) |
PART I – FINANCIAL INFORMATION | Item 1 |
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Net revenue by segment | |||||||||||
Sleep and Respiratory Care | $ | $ | |||||||||
Software as a Service | |||||||||||
Total | $ | $ | |||||||||
Depreciation and amortization by segment | |||||||||||
Sleep and Respiratory Care | $ | $ | |||||||||
Software as a Service | |||||||||||
Amortization of acquired intangible assets and corporate assets | |||||||||||
Total | $ | $ | |||||||||
Net operating profit by segment | |||||||||||
Sleep and Respiratory Care | $ | $ | |||||||||
Software as a Service | |||||||||||
Total | $ | $ | |||||||||
Reconciling items | |||||||||||
Corporate costs | $ | $ | |||||||||
Amortization of acquired intangible assets | |||||||||||
Astral field safety notification expenses (1) | |||||||||||
Interest expense (income), net | |||||||||||
Loss attributable to equity method investments | |||||||||||
(Gain) loss on equity investments | |||||||||||
Other, net | ( | ||||||||||
Income before income taxes | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
Inventories | September 30, 2023 | June 30, 2023 | |||||||||
Raw materials | $ | $ | |||||||||
Work in progress | |||||||||||
Finished goods | |||||||||||
Total inventories | $ | $ |
Prepaid expenses and other current assets | September 30, 2023 | June 30, 2023 | |||||||||
Prepaid taxes | $ | $ | |||||||||
Prepaid inventories | |||||||||||
Other prepaid expenses and current assets | |||||||||||
Total prepaid expenses and other current assets | $ | $ |
Property, Plant and Equipment | September 30, 2023 | June 30, 2023 | |||||||||
Property, plant and equipment, at cost | $ | $ | |||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Property, plant and equipment, net | $ | $ |
Other Intangible Assets | September 30, 2023 | June 30, 2023 | |||||||||
Developed/core product technology | $ | $ | |||||||||
Accumulated amortization | ( | ( | |||||||||
Developed/core product technology, net | |||||||||||
Customer relationships | |||||||||||
Accumulated amortization | ( | ( | |||||||||
Customer relationships, net | |||||||||||
Other intangibles | |||||||||||
Accumulated amortization | ( | ( | |||||||||
Other intangibles, net | |||||||||||
Total other intangibles, net | $ | $ |
Three Months Ended September 30, 2023 | |||||||||||||||||
Sleep and Respiratory Care | SaaS | Total | |||||||||||||||
Balance at the beginning of the period | $ | $ | $ | ||||||||||||||
Business acquisitions | |||||||||||||||||
Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||
Balance at the end of the period | $ | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
Measurement category | September 30, 2023 | June 30, 2023 | |||||||||
Fair value | $ | $ | |||||||||
Measurement alternative | |||||||||||
Equity method | |||||||||||
Total | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, 2023 | |||||||||||||||||||||||
Non-marketable securities | Marketable securities | Equity method investments | Total | ||||||||||||||||||||
Balance at the beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
Additions to investments | |||||||||||||||||||||||
Unrealized losses on marketable equity securities | ( | ( | |||||||||||||||||||||
Proceeds from exits of investments | ( | ( | |||||||||||||||||||||
Loss attributable to equity method investments | ( | ( | |||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
Carrying value at the end of the period | $ | $ | $ | $ |
Three Months Ended September 30, 2022 | |||||||||||||||||||||||
Non-marketable securities | Marketable securities | Equity method investments | Total | ||||||||||||||||||||
Balance at the beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
Additions to investments | |||||||||||||||||||||||
Unrealized losses on marketable equity securities | ( | ( | |||||||||||||||||||||
Loss attributable to equity method investments | ( | ( | |||||||||||||||||||||
Carrying value at the end of the period | $ | $ | $ | $ |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Balance at the beginning of the period | $ | $ | |||||||||
Warranty accruals for the period | |||||||||||
Warranty costs incurred for the period | ( | ( | |||||||||
Foreign currency translation adjustments | ( | ( | |||||||||
Balance at the end of the period | $ | $ |
September 30, 2023 | June 30, 2023 | ||||||||||
Short-term debt | $ | $ | |||||||||
Deferred borrowing costs | ( | ( | |||||||||
Short-term debt, net | $ | $ | |||||||||
Long-term debt | $ | $ | |||||||||
Deferred borrowing costs | ( | ( | |||||||||
Long-term debt, net | $ | $ | |||||||||
Total debt | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Numerator: | |||||||||||
Net income | $ | $ | |||||||||
Denominator: | |||||||||||
Basic weighted-average common shares outstanding | |||||||||||
Effect of dilutive securities: | |||||||||||
Stock options and restricted stock units | |||||||||||
Diluted weighted average shares | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ |
PART I – FINANCIAL INFORMATION | Item 1 |
PART I – FINANCIAL INFORMATION | Item 1 |
PART I – FINANCIAL INFORMATION | Item 1 |
September 30, 2023 | June 30, 2023 | Balance Sheet Caption | |||||||||||||||
Derivative Assets | |||||||||||||||||
Not Designated as Hedging Instruments | |||||||||||||||||
Foreign currency hedging instruments | $ | $ | |||||||||||||||
Foreign currency hedging instruments | |||||||||||||||||
Total derivative assets | $ | $ | |||||||||||||||
Derivative Liabilities | |||||||||||||||||
Designated as Hedging Instruments | |||||||||||||||||
Foreign cross-currency swaps – Fair Value Hedge | $ | $ | |||||||||||||||
Foreign cross-currency swaps – Net Investment Hedge | $ | Other long-term liabilities | |||||||||||||||
Not Designated as Hedging Instruments | |||||||||||||||||
Foreign currency hedging instruments | |||||||||||||||||
Foreign currency hedging instruments | Other long-term liabilities | ||||||||||||||||
Total derivative liabilities | $ | $ |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Gain (loss) recognized in other comprehensive income (loss) | $ | $ | |||||||||
Gain (loss) recognized on cross-currency swap in interest (expense) income, net (amount excluded from effectiveness testing) | |||||||||||
Gain (loss) recognized on cross-currency swap in other, net | |||||||||||
Gain (loss) recognized on intercompany debt in other, net | ( |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Gain (loss) recognized in cumulative translation adjustment within other comprehensive income (loss) | $ | $ | |||||||||
Gain (loss) recognized from the excluded components in interest (expense) income, net |
PART I – FINANCIAL INFORMATION | Item 1 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Gain (loss) recognized on foreign currency hedging instruments in other, net | $ | ( | $ | ( | |||||||
Gain (loss) recognized on other foreign-currency-denominated transactions in other, net | |||||||||||
Total | $ | $ | ( |
PART I – FINANCIAL INFORMATION | Item 2 |
PART I – FINANCIAL INFORMATION | Item 2 |
PART I – FINANCIAL INFORMATION | Item 2 |
Three Months Ended September 30, | % Change | Constant Currency* | |||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
U.S., Canada and Latin America | |||||||||||||||||||||||
Devices | $ | 345,897 | $ | 339,545 | 2 | % | |||||||||||||||||
Masks and other | 292,461 | 238,560 | 23 | ||||||||||||||||||||
Total U.S., Canada and Latin America | $ | 638,358 | $ | 578,105 | 10 | ||||||||||||||||||
Combined Europe, Asia and other markets | |||||||||||||||||||||||
Devices | $ | 218,831 | $ | 178,032 | 23 | % | 20 | % | |||||||||||||||
Masks and other | 105,848 | 88,306 | 20 | 15 | |||||||||||||||||||
Total Combined Europe, Asia and other markets | $ | 324,679 | $ | 266,338 | 22 | 18 | |||||||||||||||||
Global revenue | |||||||||||||||||||||||
Total Devices | $ | 564,728 | $ | 517,577 | 9 | % | 8 | % | |||||||||||||||
Total Masks and other | 398,309 | 326,866 | 22 | 21 | |||||||||||||||||||
Total Sleep and Respiratory Care | $ | 963,037 | $ | 844,443 | 14 | 13 | |||||||||||||||||
Software as a Service | 139,284 | 105,851 | 32 | ||||||||||||||||||||
Total | $ | 1,102,321 | $ | 950,294 | 16 | 15 |
PART I – FINANCIAL INFORMATION | Item 2 |
Three Months Ended September 30, | Change | % Change | Constant Currency | ||||||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||||||||
Selling, general, and administrative | $ | 222,874 | $ | 193,933 | $ | 28,941 | 15 | % | 14 | % | |||||||||||||||||||
as a % of net revenue | 20.2 | % | 20.4 | % | |||||||||||||||||||||||||
Research and development | 75,710 | 63,188 | 12,522 | 20 | % | 21 | % | ||||||||||||||||||||||
as a % of net revenue | 6.9 | % | 6.6 | % | |||||||||||||||||||||||||
Amortization of acquired intangible assets | 12,479 | 7,950 | 4,529 | 57 | % | 58 | % |
PART I – FINANCIAL INFORMATION | Item 2 |
Three Months Ended September 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Interest (expense) income, net | $ | (14,957) | $ | (7,134) | $ | (7,823) | |||||||||||
Loss attributable to equity method investments | (3,895) | (2,028) | (1,867) | ||||||||||||||
Gain (loss) on equity investments | (602) | (3,280) | 2,678 | ||||||||||||||
Other, net | 2,648 | (1,504) | 4,152 | ||||||||||||||
Total other income (loss), net | $ | (16,806) | $ | (13,946) | $ | (2,860) |
PART I – FINANCIAL INFORMATION | Item 2 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
GAAP Net revenue | $ | 1,102,321 | $ | 950,294 | |||||||
GAAP Cost of sales | $ | 502,261 | $ | 409,484 | |||||||
Less: Amortization of acquired intangibles | (8,908) | (6,374) | |||||||||
Less: Astral field safety notification expenses | (7,911) | — | |||||||||
Non-GAAP cost of sales | $ | 485,442 | $ | 403,110 | |||||||
GAAP gross profit | $ | 600,060 | $ | 540,810 | |||||||
GAAP gross margin | 54.4 | % | 56.9 | % | |||||||
Non-GAAP gross profit | $ | 616,879 | $ | 547,184 | |||||||
Non-GAAP gross margin | 56.0 | % | 57.6 | % |
PART I – FINANCIAL INFORMATION | Item 2 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
GAAP income from operations | $ | 288,997 | $ | 275,739 | |||||||
Amortization of acquired intangibles - cost of sales | 8,908 | 6,374 | |||||||||
Amortization of acquired intangibles - operating expenses | 12,479 | 7,950 | |||||||||
Acquisition-related expenses | 483 | 745 | |||||||||
Astral field safety notification expenses | 7,911 | — | |||||||||
Non-GAAP income from operations | $ | 318,778 | $ | 290,808 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
GAAP net income | $ | 219,422 | $ | 210,478 | |||||||
Amortization of acquired intangibles - cost of sales | 8,908 | 6,374 | |||||||||
Amortization of acquired intangibles - operating expenses | 12,479 | 7,950 | |||||||||
Acquisition related expenses | 483 | 745 | |||||||||
Astral field safety notification expenses | 7,911 | — | |||||||||
Income tax effect on non-GAAP adjustments | (8,019) | (3,458) | |||||||||
Non-GAAP net income | $ | 241,184 | $ | 222,089 | |||||||
Diluted shares outstanding | 147,486 | 147,134 | |||||||||
GAAP diluted earnings per share | $ | 1.49 | $ | 1.43 | |||||||
Non-GAAP diluted earnings per share | $ | 1.64 | $ | 1.51 |
PART I – FINANCIAL INFORMATION | Item 2 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Net cash provided by operating activities | $ | 286,283 | $ | 44,662 | |||||||
Net cash used in investing activities | (148,980) | (58,806) | |||||||||
Net cash used in financing activities | (151,132) | (41,880) | |||||||||
Effect of exchange rate changes on cash | (4,962) | (10,523) | |||||||||
Net decrease in cash and cash equivalents | $ | (18,791) | $ | (66,547) |
PART I – FINANCIAL INFORMATION | Item 2 |
PART I – FINANCIAL INFORMATION | Item 3 |
PART I – FINANCIAL INFORMATION | Item 3 |
U.S. Dollar (USD) | Euro (EUR) | Canadian Dollar (CAD) | Chinese Yuan (CNY) | ||||||||||||||||||||
AUD Functional: | |||||||||||||||||||||||
Net Assets/(Liabilities) | 412,361 | (141,366) | — | 30,193 | |||||||||||||||||||
Foreign Currency Hedges | (415,000) | 111,160 | — | (10,996) | |||||||||||||||||||
Net Total | (2,639) | (30,206) | — | 19,197 | |||||||||||||||||||
USD Functional: | |||||||||||||||||||||||
Net Assets/(Liabilities) | — | 300,172 | 26,330 | — | |||||||||||||||||||
Foreign Currency Hedges | — | (296,426) | (29,445) | — | |||||||||||||||||||
Net Total | — | 3,746 | (3,115) | — | |||||||||||||||||||
SGD Functional: | |||||||||||||||||||||||
Net Assets/(Liabilities) | 493,152 | 108,853 | — | 1,319 | |||||||||||||||||||
Foreign Currency Hedges | (495,000) | (127,040) | — | — | |||||||||||||||||||
Net Total | (1,848) | (18,187) | — | 1,319 |
PART I – FINANCIAL INFORMATION | Item 3 |
Fair Value Assets / (Liabilities) | |||||||||||||||||
Total | September 30, 2023 | June 30, 2023 | |||||||||||||||
AUD/USD | |||||||||||||||||
Contract amount | 415,000 | (11,268) | (1,064) | ||||||||||||||
Ave. contractual exchange rate | AUD 1 = USD 0.6624 | ||||||||||||||||
AUD/Euro | |||||||||||||||||
Contract amount | 206,439 | (861) | (915) | ||||||||||||||
Ave. contractual exchange rate | AUD 1 = EUR 0.6351 | ||||||||||||||||
SGD/Euro | |||||||||||||||||
Contract amount | 206,439 | 1,815 | (1,760) | ||||||||||||||
Ave. contractual exchange rate | SGD 1 = Euro 0.6903 | ||||||||||||||||
SGD/USD | |||||||||||||||||
Contract amount | 495,000 | (11,561) | (4,133) | ||||||||||||||
Ave. contractual exchange rate | SGD 1 = USD 0.7513 | ||||||||||||||||
AUD/CNY | |||||||||||||||||
Contract amount | 10,996 | (324) | (31) | ||||||||||||||
Ave. contractual exchange rate | AUD 1 = CNY 4.7507 | ||||||||||||||||
USD/EUR | |||||||||||||||||
Contract amount | 1,014,831 | (27,250) | (60,546) | ||||||||||||||
Ave. contractual exchange rate | USD 1 = EUR .9610 | ||||||||||||||||
USD/CAD | |||||||||||||||||
Contract amount | 29,445 | 929 | 156 | ||||||||||||||
Ave. contractual exchange rate | CAD 1 = USD 0.7594 |
3.1 | ||||||||
3.2 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32* | ||||||||
101 | The following financial statements from ResMed Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on October 26, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, (v) the Notes to the Condensed Consolidated Financial Statements. | |||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* | 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. |
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) |
EXHIBIT 31.1 |
/s/ MICHAEL J. FARRELL | |||||
Michael J. Farrell | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) |
EXHIBIT 31.2 |
/s/ BRETT A. SANDERCOCK | |||||
Brett A. Sandercock | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) |
EXHIBIT 32.1 |
/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) |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 20,532 | $ 23,603 |
Preferred stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value per share (in dollars per share) | $ 0.004 | $ 0.004 |
Common stock, shares authorized (shares) | 350,000,000 | 350,000,000 |
Common stock, shares issued (in shares) | 188,921,316 | 188,900,583 |
Common stock, shares outstanding (in shares) | 147,085,082 | 147,064,349 |
Treasury stock, shares (in shares) | 41,836,234 | 41,836,234 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
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Sep. 30, 2023 |
Sep. 30, 2022 |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||
Net income | $ 219,422 | $ 210,478 |
Other comprehensive income (loss), net of taxes: | ||
Unrealized losses on designated hedging instruments | (17,093) | 0 |
Foreign currency translation (loss) gain adjustments | (30,527) | (93,381) |
Comprehensive income | $ 171,802 | $ 117,097 |
Condensed Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |
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Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividend declared per share (in dollars per share) | $ 0.48 | $ 0.44 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Organization and Basis of Presentation ResMed Inc. (referred to herein as “we”, “us”, “our” or the “Company”) is a Delaware corporation formed in March 1994 as a holding company for the ResMed Group. Through our subsidiaries, we design, manufacture and market equipment for the diagnosis and treatment of sleep-disordered breathing and other respiratory disorders, including obstructive sleep apnea. Our manufacturing operations are located in Australia, Singapore, Malaysia, France, China and the United States. Major distribution and sales sites are located in the United States, Germany, France, the United Kingdom, Switzerland, Australia, Japan, China, Finland, Norway and Sweden. We also operate a Software as a Service (“SaaS”) business in the United States and Germany that includes out-of-hospital software platforms designed to support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and the rules of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. The condensed consolidated financial statements for the three months ended September 30, 2023 and September 30, 2022 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2023. Revenue Recognition In accordance with Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”, we account for a contract with a customer when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. We have determined that we have two operating segments, which are the sleep and respiratory disorders sector of the medical device industry (“Sleep and Respiratory Care”) and the supply of business management software as a service to out-of-hospital care providers (“SaaS”). Our Sleep and Respiratory Care revenue relates primarily to the sale of our products that are therapy-based equipment. Some contracts include additional performance obligations such as the provision of extended warranties and provision of data for patient monitoring. Our SaaS revenue relates to the provision of software access with ongoing support and maintenance services as well as professional services such as training and consulting. Disaggregation of revenue The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):
Performance obligations and contract balances Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied; generally, this occurs with the transfer of risk and/or control of our products at a point in time. For products in our Sleep and Respiratory Care business, we transfer control and recognize a sale when products are shipped to the customer in accordance with the contractual shipping terms. For our SaaS business, revenue associated with cloud-hosted services are recognized as they are provided. We defer the recognition of a portion of the consideration received when performance obligations are not yet satisfied. Consideration received from customers in advance of revenue recognition is classified as deferred revenue. Performance obligations resulting in deferred revenue in our Sleep and Respiratory Care business relate primarily to extended warranties on our devices and the provision of data for patient monitoring. Performance obligations resulting in deferred revenue in our SaaS business relate primarily to the provision of software access with maintenance and support over an agreed term and material rights associated with future discounts upon renewal of some SaaS contracts. Generally, deferred revenue will be recognized over a period of one year to five years. Our contracts do not contain significant financing components. The following table summarizes our contract balances (in thousands):
Transaction price determination Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. In our Sleep and Respiratory Care segment, the amount of consideration received and revenue recognized varies with changes in marketing incentives (e.g. rebates, discounts, free goods) and returns offered to our customers and their customers. When we give customers the right to return eligible products and receive credit, returns are estimated based on an analysis of our historical experience. However, returns of products, excluding warranty-related returns, have historically been infrequent and insignificant. We adjust the estimate of revenue at the earlier of when the most likely amount of consideration can be estimated, the amount expected to be received changes, or when the consideration becomes fixed. We offer our Sleep and Respiratory Care customers cash or product rebates based on volume or sales targets measured over quarterly or annual periods. We estimate rebates based on each customer’s expected achievement of its targets. In accounting for these rebate programs, we reduce revenue ratably as sales occur over the rebate period by the expected value of the rebates to be returned to the customer. Rebates measured over a quarterly period are updated based on actual sales results and, therefore, no estimation is required to determine the reduction to revenue. For rebates measured over annual periods, we update our estimates each quarter based on actual sales results and updated forecasts for the remaining rebate periods. We participate in programs where we issue credits to our Sleep and Respiratory Care distributors when they are required to sell our products below negotiated list prices if we have preexisting contracts with the distributors' customers. We reduce revenue for future credits at the time of sale to the distributor, which we estimate based on historical experience using the expected value method. We also offer discounts to both our Sleep and Respiratory Care as well as our SaaS customers as part of normal business practice and these are deducted from revenue when the sale occurs. When Sleep and Respiratory Care or SaaS contracts have multiple performance obligations, we generally use an observable price to determine the stand-alone selling price by reference to pricing and discounting practices for the specific product or service when sold separately to similar customers. Revenue is then allocated proportionately, based on the determined stand-alone selling price, to each performance obligation. An allocation is not required for many of our Sleep and Respiratory Care contracts that have a single performance obligation, which is the shipment of our therapy-based equipment. Accounting and practical expedient elections We have elected to account for shipping and handling activities associated with our Sleep and Respiratory Care segment as a fulfillment cost within cost of sales, and record shipping and handling costs collected from customers in net revenue. We have also elected for all taxes assessed by government authorities that are imposed on and concurrent with revenue-producing transactions, such as sales and value added taxes, to be excluded from revenue and presented on a net basis. We have elected two practical expedients including the “right to invoice” practical expedient, which is relevant for some of our SaaS contracts as it allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date. The second practical expedient adopted permits relief from considering a significant financing component when the payment for the good or service is expected to be one year or less. Lease Revenue We lease Sleep and Respiratory Care medical devices to customers primarily as a means to comply with local health insurer requirements in certain foreign geographies. Device rental contracts are classified as operating leases, and contract terms vary by customer and include options to terminate or extend the contract. When lease contracts also include the sale of masks and accessories, we allocate contract consideration to those items on a relative standalone price basis and recognize revenue when control transfers to the customer. Operating lease revenue was $22.7 million for the three months ended September 30, 2023 and $23.7 million for the three months ended September 30, 2022. Provision for Warranty We provide for the estimated cost of product warranties on our Sleep and Respiratory Care products at the time the related revenue is recognized. We determine the amount of this provision by using a financial model, which takes into consideration actual historical expenses and potential risks associated with our different products. We use this financial model to calculate the future probable expenses related to warranty and the required level of the warranty provision. Although we engage in product improvement programs and processes, our warranty obligation is affected by product failure rates and costs incurred to correct those product failures. Should actual product failure rates or estimated costs to repair those product failures differ from our estimates, we would be required to revise our estimated warranty provision.
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Segment Information |
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Segment Information | Segment Information We have quantitatively and qualitatively determined that we operate in two operating segments, which are the Sleep and Respiratory Care segment and the SaaS segment. We evaluate the performance of our segments based on net revenues and income from operations. The accounting policies of the segments are the same as those described in note 2 of our consolidated financial statements included in our Form 10-K for the fiscal year ended June 30, 2023. Segment net revenues and segment income from operations do not include inter-segment profits and revenue is allocated to a geographic area based on where the products are shipped to or where the services are performed. Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include corporate headquarters costs, stock-based compensation, amortization expense from acquired intangibles, acquisition related expenses, net interest expense (income), loss attributable to equity method investments, gains and losses on equity investments, and other, net. We neither discretely allocate assets to our operating segments, nor does our Chief Operating Decision Maker evaluate the operating segments using discrete asset information. The table below presents a reconciliation of net revenues and net operating profit by reportable segments (in thousands):
(1) The Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral ventilation devices that were manufactured between 2013 to 2019.
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Supplemental Balance Sheet Information |
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Supplemental Balance Sheet Information | Supplemental Balance Sheet Information Components of selected captions in the condensed consolidated balance sheets consisted of the following (in thousands):
Intangible assets consist of developed/core product technology, trade names, non-compete agreements, customer relationships, and patents, which we amortize over the estimated useful life of the assets, generally between two years to fifteen years. There are no expected residual values related to these intangible assets.
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Goodwill |
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Goodwill | Goodwill A reconciliation of changes in our goodwill by reportable segment is as follows (in thousands):
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Investments |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments We have equity investments in privately and publicly held companies that are unconsolidated entities. The following discusses our investments in marketable equity securities, non-marketable equity securities, and investments accounted for under the equity method. Our marketable equity securities are publicly traded stocks measured at fair value and classified within Level 1 in the fair value hierarchy because we use quoted prices for identical assets in active markets. Marketable equity securities are recorded in prepaid expenses and other current assets on the condensed consolidated balance sheets. Non-marketable equity securities consist of investments in privately held companies without readily determinable fair values and are recorded in prepaid taxes and other non-current assets on the condensed consolidated balance sheets. Non-marketable equity securities are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. We assess non-marketable equity securities at least quarterly for impairment and consider qualitative and quantitative factors including the investee's financial metrics, product and commercial outlook and cash usage. All gains and losses on marketable and non-marketable equity securities, realized and unrealized, are recognized in gain (loss) on equity investments as a component of other income (loss), net on the condensed consolidated statements of operations. Equity investments whereby we have significant influence, but not control over the investee and are not the primary beneficiary of the investee’s activities, are accounted for under the equity method. Under this method, we record our share of gains or losses attributable to equity method investments as a component of other income (loss), net on the condensed consolidated statements of operations. Equity investments by measurement category were as follows (in thousands):
The following tables show a reconciliation of the changes in our equity investments (in thousands):
Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of September 30, 2023 for the three months ended September 30, 2023 were $0.6 million. Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of September 30, 2022 for the three months ended September 30, 2022 were $3.3 million.
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Product Warranties |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties | Product Warranties Changes in the liability for warranty costs, which is included in accrued expenses in our condensed consolidated balance sheets, are as follows (in thousands):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt consisted of the following (in thousands):
Credit Facility On June 29, 2022, we entered into a second amended and restated credit agreement (the “Revolving Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger, sole book runner, swing line lender and letter of credit issuer, Westpac Banking Corporation, as syndication agent and joint lead arranger, HSBC Bank USA, National Association, as syndication agent and joint lead arranger, and Wells Fargo Bank, National Association, as documentation agent. The Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $1,500.0 million, with an uncommitted option to increase the revolving credit facility by an additional amount equal to the greater of $1,000.0 million or 1.0 times the EBITDA (as defined in the Revolving Credit Agreement) for the trailing twelve-month measurement period. The Revolving Credit Agreement amends and restates that certain Amended and Restated Credit Agreement, dated as of April 17, 2018, among ResMed, MUFG Union Bank, N.A., Westpac Banking Corporation and the lenders party thereto. Additionally, on June 29, 2022, ResMed Pty Limited entered into a Second Amendment to the Syndicated Facility Agreement and First Amendment to Unconditional Guaranty Agreement (the “Term Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger and joint book runner, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner, which amends that certain Syndicated Facility Agreement dated as of April 17, 2018. The Term Credit Agreement, among other things, provides ResMed Pty Limited a senior unsecured term credit facility of $200.0 million. Our obligations under the Revolving Credit Agreement are guaranteed by certain of our direct and indirect U.S. subsidiaries, and ResMed Pty Limited’s obligations under the Term Credit Agreement are guaranteed by us and certain of our direct and indirect U.S. subsidiaries. The Revolving Credit Agreement and Term Credit Agreement contain customary covenants, including, in each case, a financial covenant that requires that we maintain a maximum leverage ratio of funded debt to EBITDA (as defined in the Revolving Credit Agreement and Term Credit Agreement, as applicable). The entire principal amounts of the revolving credit facility and term credit facility, and, in each case, any accrued but unpaid interest may be declared immediately due and payable if an event of default occurs, as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable. Events of default under the Revolving Credit Agreement and the Term Credit Agreement include, in each case, failure to make payments when due, the occurrence of a default in the performance of any covenants in the respective agreements or related documents, or certain changes of control of us, or the respective guarantors of the obligations borrowed under the Revolving Credit Agreement and Term Credit Agreement. The Revolving Credit Agreement and Term Credit Agreement each terminate on June 29, 2027, when all unpaid principal and interest under the loans must be repaid. Amounts borrowed under the Term Credit Agreement will also amortize on a semi-annual basis, with a $5.0 million principal payment required on each such semi-annual amortization date. The outstanding principal amounts will bear interest at a rate equal to the Adjusted Term SOFR (as defined in the Revolving Credit Facility) plus 0.75% to 1.50% (depending on the then-applicable leverage ratio) or the Base Rate (as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable) plus 0.0% to 0.50% (depending on the then-applicable leverage ratio). At September 30, 2023, the interest rate that was being charged on the outstanding principal amounts was 6.3%. An applicable commitment fee of 0.075% to 0.150% (depending on the then-applicable leverage ratio) applies on the unused portion of the revolving credit facility. As of September 30, 2023, we had $825.0 million available for draw down under the revolving credit facility. We are required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets. As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as Adjusted Term SOFR plus the spreads described above, its carrying amount is equivalent to its fair value as at September 30, 2023 and June 30, 2023, which was $865.0 million and $945.0 million, respectively. Senior Notes On July 10, 2019, we entered into a Note Purchase Agreement with the purchasers to that agreement, in connection with the issuance and sale of $250.0 million principal amount of our 3.24% senior notes due July 10, 2026, and $250.0 million principal amount of our 3.45% senior notes due July 10, 2029 (collectively referred to as the “Senior Notes”). Our obligations under the Note Purchase Agreement and the Senior Notes are unconditionally and irrevocably guaranteed by certain of our direct and indirect U.S. subsidiaries. The net proceeds from this transaction were used to pay down borrowings on our Revolving Credit Agreement. Under the terms of the Note Purchase Agreement, we agreed to customary covenants including with respect to our corporate existence, transactions with affiliates, and mergers and other extraordinary transactions. We also agreed that, subject to limited exceptions, we will maintain a ratio of consolidated funded debt to consolidated EBITDA (as defined in the Note Purchase Agreement) of no more than 3.50 to 1.00 as of the last day of any fiscal quarter, and will not at any time permit the amount of all priority secured and unsecured debt of us and our subsidiaries to exceed 10% of our consolidated tangible assets, determined as of the end of our most recently ended fiscal quarter. This ratio is calculated at the end of each reporting period for which the Note Purchase Agreement requires us to deliver financial statements, using the results of the 12 consecutive month period ending with such reporting period. We are required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets. As of September 30, 2023 and June 30, 2023, the Senior Notes had a carrying amount of $500.0 million, excluding deferred borrowing costs, and an estimated fair value of $451.7 million and $462.2 million, respectively. Quoted market prices in active markets for similar liabilities based inputs (Level 2) were used to estimate fair value. At September 30, 2023, we were in compliance with our debt covenants and there was $1,365.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.
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Earnings Per Share |
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Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of calculating diluted earnings per share, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents such as stock options and restricted stock units. The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 417,364 and 113,167 for the three months ended September 30, 2023 and 2022, respectively, as the effect would have been anti-dilutive. Basic and diluted earnings per share are calculated as follows (in thousands except per share data):
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Legal Actions, Contingencies and Commitments |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Actions, Contingencies and Commitments | Legal Actions, Contingencies and Commitments Litigation In the normal course of business, we are subject to routine litigation incidental to our business. While the results of this litigation cannot be predicted with certainty, we believe that their final outcome will not, individually or in aggregate, have a material adverse effect on our consolidated financial statements taken as a whole. On June 2, 2021, New York University ("NYU") filed a complaint for patent infringement in the United States District Court, District of Delaware against ResMed Inc., case no. 1:21-cv-00813 (JPM). The complaint alleges that the AutoSet or AutoRamp features of ResMed’s AirSense 10 AutoSet flow generators infringe one or more claims of various NYU patents, including U.S. Patent Nos. 6,988,994; 9,108,009; 9,168,344; 9,427,539; 9,533,115; 9,867,955; and 10,384,024. According to the complaint, the NYU patents are directed to systems and methods for diagnosis and treating sleeping disorders during different sleep states. The complaint seeks monetary damages and attorneys’ fees. We answered the complaint on September 30, 2021 and filed a motion to dismiss the complaint on the basis that the patents are invalid because the subject matter of the patents is not patentable under the Supreme Court and Federal Circuit precedent. The motion to dismiss was granted in part and denied in part. We have also requested that the court dismiss the case based on NYU’s license of the patents to Fisher & Paykel and Fisher & Paykel’s prior settlement with us; that request is pending. In December 2022, the Patent Trial and Appeals Board (“PTAB”) of the Patent and Trademark Office granted our request to review the validity of the claims in the patents asserted by NYU against us, determining that there is a reasonable likelihood that we will prevail. The PTAB’s final written decisions on the validity of the asserted claims is expected by December 2023. On April 10, 2023, the district court granted our request to stay the case pending the PTAB’s decision on the validity of the patents asserted by NYU. On January 27, 2021, the International Trade Commission ("ITC") instituted In Re Certain UMTS and LTE Cellular Communications Modules and Products Containing the Same, Investigation No. 337-TA-1240, by complainants Philips RS North America, LLC and Koninklijke Philips N.V. (collectively “Philips”) against Quectel Wireless Solutions Co., Ltd; Thales DIS AIS USA, LLC, Thales DIS AIS Deutschland GmbH; Telit Wireless Solutions, Inc., Telit Communications PLC, CalAmp. Corp., Xirgo Technologies, LLC, and Laird Connectivity, Inc. (collectively “respondents”). In the ITC investigation, Philips seeks an order excluding communications modules, and products that contain them, from importation into the United States based on alleged infringement of 3G and 4G standard essential patents held by Philips. On October 6-14, 2021, the administrative law judge held a hearing on the merits. The administrative law judge issued an initial determination on April 1, 2022, finding no violation of any of the Philips' patents asserted in the ITC. Philips sought review by the full ITC. On July 6, 2022, the Commission affirmed the administrative law judge’s determination that there was no violation of asserted Philips' patents. The Commission terminated the ITC proceedings. Philips did not appeal the ITC’s decision. On December 17, 2020, Philips filed companion cases for patent infringement against the same defendants in the United States District Court for the District of Delaware, case nos. 1:20-cv-01707, 01708, 01709, 01710, 01711, and 01713 (CFC) seeking damages, an injunction, and a declaration from the court on the amount of a fair reasonable and non-discriminatory license rate for the standard essential patents it is asserting against the communications module defendants. The district court cases were stayed pending the resolution of the ITC proceedings. The parties have returned to the district court for further proceedings. We were not a party to the ITC investigation, and we are not a party to the district court cases, but we sell products that incorporate communications modules at issue in the district court case. The first trial in these cases is set for August 12, 2024. On June 16, 2022, Cleveland Medical Devices Inc. ("Cleveland Medical") filed suit for patent infringement against ResMed Inc. in the United States District Court for the District of Delaware, case no. 1:22-cv-00794. Cleveland Medical asserts that numerous ResMed connected devices, when combined with certain ResMed data platforms and/or software, including AirView and ResScan, infringe one or more of eight Cleveland Medical patents, including U.S. Patent Nos. 10,076,269; 10,426,399; 10,925,535; 11,064,937; 10,028,698; 10,478,118; 11,202,603; and 11,234,637. We moved to dismiss the action because Cleveland Medical sued the wrong ResMed entity, and to dismiss the indirect and willful infringement allegations by Cleveland Medical. On October 2, 2023, the court granted a portion of the motion, dismissing all Cleveland Medical claims for indirect and willful infringement, and declined the rest of the motion. On March 23, 2023, we filed a petition with the Patent Trial and Appeals Board of the Patent and Trademark Office seeking review of the validity of Cleveland Medical U.S. Patent 10,076,269. On September 25, 2023, the PTAB exercised its discretion to deny our petition challenging the validity of the ‘269 patent in light of the August 2024 trial date in the Delaware District Court case; that decision does not impact the merits of our invalidity challenge in that trial. On March 23, 2023, ResMed Corp. filed suit in the Southern District of California, case no. 23-cv-00500-TWR-JLB, seeking a declaration that it does not infringe U.S. patent number 11,602,284 recently issued to Cleveland Medical. Cleveland Medical has asked the court to dismiss the California case or to move it to Delaware or Cleveland for the convenience of the parties. We are opposing that request. Based on currently available information, we are unable to make a reasonable estimate of loss or range of losses, if any, arising from matters that remain open. Contingent Obligations Under Recourse Provisions We use independent financing institutions to offer some of our customers financing for the purchase of some of our products. Under these arrangements, if the customer qualifies under the financing institutions’ credit criteria and finances the transaction, the customers repay the financing institution on a fixed payment plan. For some of these arrangements, the customer’s receivable balance is with limited recourse whereby we are responsible for repaying the financing company should the customer default. We record a contingent provision, which is estimated based on historical default rates. This is applied to receivables sold with recourse and is recorded in accrued expenses. During the three months ended September 30, 2023 and September 30, 2022, receivables sold with limited recourse were $47.7 million and $39.9 million, respectively. As of September 30, 2023, the maximum exposure on outstanding receivables sold with recourse and the associated contingent provision were $28.9 million and $0.8 million, respectively. As of June 30, 2023, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $32.6 million and $0.6 million, respectively.
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We may use derivative financial instruments, specifically foreign cross-currency swaps, purchased foreign currency call options, collars and forward contracts to mitigate exposure from certain foreign currency risk. No derivatives are used for trading or speculative purposes. We do not require or are not required to pledge collateral for the derivative instruments. Fair Value and Net Investment Hedging On November 17, 2022, we executed foreign cross-currency swaps as net investment hedges and fair value hedges in designated hedging relationships with either the foreign denominated net asset balances or the foreign denominated intercompany loan as the hedged items. All derivatives are recorded at fair value as either an asset or liability. Cash flows associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the hedged item. The purpose of the cross-currency swaps for the fair value hedge is to mitigate foreign currency risk associated with changes in spot rates on foreign denominated intercompany debt between USD and EUR. For these hedges, we excluded certain components from the assessment of hedge effectiveness that are not related to spot rates. For fair value hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in the same line item as the hedged item, other, net, in the condensed consolidated statement of operations. The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in the statement of operations under a systematic and rational method over the life of the hedging instrument and is presented in interest (expense) income, net. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income. The purpose of the cross-currency swaps for the net investment hedge is to mitigate foreign currency risk associated with changes in spot rates on the net asset balances of our foreign functional subsidiaries. For net investment hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in cumulative translation adjustment within other comprehensive loss and reclassified into earnings when the hedged net investment is either sold or substantially liquidated. The initial fair value of components excluded from the assessment of hedge effectiveness will be recognized in interest (expense) income, net. The notional value of outstanding foreign cross-currency swaps was $1,014.8 million and $1,046.6 million at September 30, 2023 and June 30, 2023, respectively. These contracts mature at various dates prior to December 31, 2029. Non-Designated Hedges We transact business in various foreign currencies, including a number of major European currencies as well as the Australian and Singapore dollars. We have foreign currency exposure through both our Australian and Singapore manufacturing activities, and international sales operations. We have established a foreign currency hedging program using purchased foreign currency call options, collars and forward contracts to hedge foreign-currency-denominated financial assets, liabilities and manufacturing cash flows. The terms of such foreign currency hedging contracts generally do not exceed three years. The purpose of this hedging program is to economically manage the financial impact of foreign currency exposures denominated mainly in Euros, and Australian and Singapore dollars. Under this program, increases or decreases in our foreign currency denominated financial assets, liabilities, and firm commitments are partially offset by gains and losses on the hedging instruments. We do not designate these foreign currency contracts as hedges. All movements in the fair value of the foreign currency instruments are recorded within other, net in our condensed consolidated statements of income. The notional value of the outstanding non-designated hedges was $1,363.3 million and $954.7 million at September 30, 2023 and June 30, 2023, respectively. These contracts mature at various dates prior to March 15, 2025. Fair Values of Derivative Instruments The following table presents our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets (in thousands):
Fair Value Hedge Gains (Losses) We recognized the following gains (losses) on the foreign cross currency swaps designated as fair value hedges (in thousands):
Net Investment Hedge Gains (Losses) We recognized the following gains (losses) on the foreign cross currency swaps designated as net investment hedges (in thousands):
Non-designated Derivative Gains (Losses) We recognized the following gains (losses) in the condensed consolidated statement of operations on derivatives not designated as hedging instruments (in thousands):
We classified the fair values of all hedging instruments as Level 2 measurements within the fair value hierarchy. We are exposed to credit-related losses in the event of non-performance by counter parties to financial instruments. We minimize counterparty credit risk by entering into derivative transactions with major financial institutions.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | |
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Sep. 30, 2023 |
Sep. 30, 2022 |
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Pay vs Performance Disclosure | ||
Net income | $ 219,422 | $ 210,478 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Basis of Presentation | Organization and Basis of Presentation ResMed Inc. (referred to herein as “we”, “us”, “our” or the “Company”) is a Delaware corporation formed in March 1994 as a holding company for the ResMed Group. Through our subsidiaries, we design, manufacture and market equipment for the diagnosis and treatment of sleep-disordered breathing and other respiratory disorders, including obstructive sleep apnea. Our manufacturing operations are located in Australia, Singapore, Malaysia, France, China and the United States. Major distribution and sales sites are located in the United States, Germany, France, the United Kingdom, Switzerland, Australia, Japan, China, Finland, Norway and Sweden. We also operate a Software as a Service (“SaaS”) business in the United States and Germany that includes out-of-hospital software platforms designed to support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and the rules of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. The condensed consolidated financial statements for the three months ended September 30, 2023 and September 30, 2022 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2023.
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Revenue Recognition | Revenue Recognition In accordance with Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”, we account for a contract with a customer when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. We have determined that we have two operating segments, which are the sleep and respiratory disorders sector of the medical device industry (“Sleep and Respiratory Care”) and the supply of business management software as a service to out-of-hospital care providers (“SaaS”). Our Sleep and Respiratory Care revenue relates primarily to the sale of our products that are therapy-based equipment. Some contracts include additional performance obligations such as the provision of extended warranties and provision of data for patient monitoring. Our SaaS revenue relates to the provision of software access with ongoing support and maintenance services as well as professional services such as training and consulting. Disaggregation of revenue The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):
Performance obligations and contract balances Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied; generally, this occurs with the transfer of risk and/or control of our products at a point in time. For products in our Sleep and Respiratory Care business, we transfer control and recognize a sale when products are shipped to the customer in accordance with the contractual shipping terms. For our SaaS business, revenue associated with cloud-hosted services are recognized as they are provided. We defer the recognition of a portion of the consideration received when performance obligations are not yet satisfied. Consideration received from customers in advance of revenue recognition is classified as deferred revenue. Performance obligations resulting in deferred revenue in our Sleep and Respiratory Care business relate primarily to extended warranties on our devices and the provision of data for patient monitoring. Performance obligations resulting in deferred revenue in our SaaS business relate primarily to the provision of software access with maintenance and support over an agreed term and material rights associated with future discounts upon renewal of some SaaS contracts. Generally, deferred revenue will be recognized over a period of one year to five years. Our contracts do not contain significant financing components. The following table summarizes our contract balances (in thousands):
Transaction price determination Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. In our Sleep and Respiratory Care segment, the amount of consideration received and revenue recognized varies with changes in marketing incentives (e.g. rebates, discounts, free goods) and returns offered to our customers and their customers. When we give customers the right to return eligible products and receive credit, returns are estimated based on an analysis of our historical experience. However, returns of products, excluding warranty-related returns, have historically been infrequent and insignificant. We adjust the estimate of revenue at the earlier of when the most likely amount of consideration can be estimated, the amount expected to be received changes, or when the consideration becomes fixed. We offer our Sleep and Respiratory Care customers cash or product rebates based on volume or sales targets measured over quarterly or annual periods. We estimate rebates based on each customer’s expected achievement of its targets. In accounting for these rebate programs, we reduce revenue ratably as sales occur over the rebate period by the expected value of the rebates to be returned to the customer. Rebates measured over a quarterly period are updated based on actual sales results and, therefore, no estimation is required to determine the reduction to revenue. For rebates measured over annual periods, we update our estimates each quarter based on actual sales results and updated forecasts for the remaining rebate periods. We participate in programs where we issue credits to our Sleep and Respiratory Care distributors when they are required to sell our products below negotiated list prices if we have preexisting contracts with the distributors' customers. We reduce revenue for future credits at the time of sale to the distributor, which we estimate based on historical experience using the expected value method. We also offer discounts to both our Sleep and Respiratory Care as well as our SaaS customers as part of normal business practice and these are deducted from revenue when the sale occurs. When Sleep and Respiratory Care or SaaS contracts have multiple performance obligations, we generally use an observable price to determine the stand-alone selling price by reference to pricing and discounting practices for the specific product or service when sold separately to similar customers. Revenue is then allocated proportionately, based on the determined stand-alone selling price, to each performance obligation. An allocation is not required for many of our Sleep and Respiratory Care contracts that have a single performance obligation, which is the shipment of our therapy-based equipment. Accounting and practical expedient elections We have elected to account for shipping and handling activities associated with our Sleep and Respiratory Care segment as a fulfillment cost within cost of sales, and record shipping and handling costs collected from customers in net revenue. We have also elected for all taxes assessed by government authorities that are imposed on and concurrent with revenue-producing transactions, such as sales and value added taxes, to be excluded from revenue and presented on a net basis. We have elected two practical expedients including the “right to invoice” practical expedient, which is relevant for some of our SaaS contracts as it allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date. The second practical expedient adopted permits relief from considering a significant financing component when the payment for the good or service is expected to be one year or less.
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Lease Revenue | Lease RevenueWe lease Sleep and Respiratory Care medical devices to customers primarily as a means to comply with local health insurer requirements in certain foreign geographies. Device rental contracts are classified as operating leases, and contract terms vary by customer and include options to terminate or extend the contract. When lease contracts also include the sale of masks and accessories, we allocate contract consideration to those items on a relative standalone price basis and recognize revenue when control transfers to the customer. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision For Warranty | Provision for Warranty We provide for the estimated cost of product warranties on our Sleep and Respiratory Care products at the time the related revenue is recognized. We determine the amount of this provision by using a financial model, which takes into consideration actual historical expenses and potential risks associated with our different products. We use this financial model to calculate the future probable expenses related to warranty and the required level of the warranty provision. Although we engage in product improvement programs and processes, our warranty obligation is affected by product failure rates and costs incurred to correct those product failures. Should actual product failure rates or estimated costs to repair those product failures differ from our estimates, we would be required to revise our estimated warranty provision.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Revenue Disaggregated by Product and Region | The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):
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Schedule of Contract Balances | The following table summarizes our contract balances (in thousands):
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Segment and Reconciling Items | The table below presents a reconciliation of net revenues and net operating profit by reportable segments (in thousands):
(1) The Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral ventilation devices that were manufactured between 2013 to 2019.
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Supplemental Balance Sheet Information (Tables) |
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Supplemental Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Components of selected captions in the condensed consolidated balance sheets consisted of the following (in thousands):
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Schedule of Prepaid Expenses and Other Current Assets |
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Schedule of Components of Property, Plant and Equipment |
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Schedule of Other Intangible Assets, Net |
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Carrying Amount of Goodwill | A reconciliation of changes in our goodwill by reportable segment is as follows (in thousands):
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Investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investments | Equity investments by measurement category were as follows (in thousands):
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Schedule of Changes in Equity Investments | The following tables show a reconciliation of the changes in our equity investments (in thousands):
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Product Warranties (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Liability for Warranty Costs | Changes in the liability for warranty costs, which is included in accrued expenses in our condensed consolidated balance sheets, are as follows (in thousands):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt consisted of the following (in thousands):
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Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Share | Basic and diluted earnings per share are calculated as follows (in thousands except per share data):
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Derivative Instruments and Hedging Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values of Derivative Instruments | The following table presents our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets (in thousands):
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Schedule of Derivative Gains (Losses) | We recognized the following gains (losses) on the foreign cross currency swaps designated as fair value hedges (in thousands):
We recognized the following gains (losses) on the foreign cross currency swaps designated as net investment hedges (in thousands):
|
Summary of Significant Accounting Policies - Narrative (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2023
USD ($)
segment
|
Sep. 30, 2022
USD ($)
|
|
Summary Of Significant Accounting Policies [Line Items] | ||
Number of operating segments | segment | 2 | |
Operating lease revenue | $ | $ 22.7 | $ 23.7 |
Minimum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Deferred revenue recognized, term | 1 year | |
Maximum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Deferred revenue recognized, term | 5 years |
Summary of Significant Accounting Policies - Schedule Of Contract Balances (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
---|---|---|
Contract assets | ||
Accounts receivable, net | $ 692,388 | $ 704,909 |
Contract liabilities | ||
Deferred revenue, current | (146,718) | (138,072) |
Deferred revenue, non-current | (121,492) | (119,186) |
Accounts receivable, net | ||
Contract assets | ||
Accounts receivable, net | 692,388 | 704,909 |
Prepaid expenses and other current assets | ||
Contract assets | ||
Unbilled revenue, current | 33,201 | 31,521 |
Prepaid taxes and other non-current assets | ||
Contract assets | ||
Unbilled revenue, non-current | 10,244 | 10,078 |
Deferred revenue (current liabilities) | ||
Contract liabilities | ||
Deferred revenue, current | (146,718) | (138,072) |
Deferred revenue (non-current liabilities) | ||
Contract liabilities | ||
Deferred revenue, non-current | $ (121,492) | $ (119,186) |
Segment Information - Narrative (Details) |
3 Months Ended |
---|---|
Sep. 30, 2023
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Supplemental Balance Sheet Information - Schedule of Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
---|---|---|
Supplemental Balance Sheet Information [Abstract] | ||
Raw materials | $ 427,860 | $ 459,126 |
Work in progress | 5,190 | 3,956 |
Finished goods | 525,183 | 534,930 |
Total inventories | $ 958,233 | $ 998,012 |
Supplemental Balance Sheet Information - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
---|---|---|
Prepaid expenses and other current assets | ||
Prepaid taxes | $ 104,710 | $ 114,009 |
Prepaid inventories | 178,490 | 143,084 |
Other prepaid expenses and current assets | 161,664 | 179,925 |
Total prepaid expenses and other current assets | $ 444,864 | $ 437,018 |
Supplemental Balance Sheet Information - Schedule of Components of Property, Plant And Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
---|---|---|
Supplemental Balance Sheet Information [Abstract] | ||
Property, plant and equipment, at cost | $ 1,201,818 | $ 1,205,868 |
Accumulated depreciation and amortization | (667,833) | (668,012) |
Property, plant and equipment, net | $ 533,985 | $ 537,856 |
Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | $ 2,770,299 |
Business acquisitions | 74,416 |
Foreign currency translation adjustments | (32,573) |
Balance at the end of the period | 2,812,142 |
Total Sleep and Respiratory Care | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 670,120 |
Business acquisitions | 74,416 |
Foreign currency translation adjustments | (8,144) |
Balance at the end of the period | 736,392 |
SaaS | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 2,100,180 |
Business acquisitions | 0 |
Foreign currency translation adjustments | (24,429) |
Balance at the end of the period | $ 2,075,751 |
Investments - Schedule of Investments (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
---|---|---|
Equity Method Investments and Joint Ventures [Abstract] | ||
Fair value | $ 11,821 | $ 12,423 |
Measurement alternative | 69,678 | 68,748 |
Equity method | 62,161 | 65,366 |
Total | $ 143,660 | $ 146,537 |
Investments - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Equity Method Investments and Joint Ventures [Abstract] | ||
Equity securities, unrealized loss | $ 0.6 | $ 3.3 |
Product Warranties (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the period | $ 27,621 | $ 25,889 |
Warranty accruals for the period | 6,025 | 2,088 |
Warranty costs incurred for the period | (4,828) | (2,612) |
Foreign currency translation adjustments | (672) | (1,272) |
Balance at the end of the period | $ 28,146 | $ 24,093 |
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
---|---|---|
Debt Disclosure [Abstract] | ||
Short-term debt | $ 10,000 | $ 10,000 |
Deferred borrowing costs | (95) | (98) |
Short-term debt, net | 9,905 | 9,902 |
Long-term debt | 1,355,000 | 1,435,000 |
Deferred borrowing costs | (3,489) | (3,766) |
Long-term debt, net | 1,351,511 | 1,431,234 |
Total debt | $ 1,361,416 | $ 1,441,136 |
Earnings Per Share - Narrative (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share, amount (share) | 417,364 | 113,167 |
Earnings Per Share - Schedule of Basic And Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Numerator: | ||
Net income | $ 219,422 | $ 210,478 |
Denominator: | ||
Basic weighted-average common shares outstanding (shares) | 147,075 | 146,431 |
Effect of dilutive securities: | ||
Stock options and restricted stock units (shares) | 411 | 703 |
Diluted weighted average shares (shares) | 147,486 | 147,134 |
Basic earnings per share (in dollars per share) | $ 1.49 | $ 1.44 |
Diluted earnings per share (in dollars per share) | $ 1.49 | $ 1.43 |
Legal Actions, Contingencies and Commitments (Details) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Jun. 30, 2023
USD ($)
|
Jun. 16, 2022
patent
|
|
Commitments and Contingencies Disclosure [Abstract] | |||||
Number of patents | patent | 8 | ||||
Receivables sold with limited recourse | $ 47.7 | $ 39.9 | |||
Maximum potential contingent liability | 28.9 | $ 32.6 | |||
Contingent provision | $ 0.6 | $ 0.8 |
Derivative Instruments and Hedging Activities - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
|
Currency Swap | Fair Value And Net Investment Hedging | ||
Derivative [Line Items] | ||
Notional value | $ 1,014.8 | $ 1,046.6 |
Foreign currency hedging instruments | Non-Designated Hedges | ||
Derivative [Line Items] | ||
Notional value | $ 1,363.3 | $ 954.7 |
Derivative, term of contract (in years) | 3 years |
Derivative Instruments and Hedging Activities - Schedule of Fair Value Hedge Gains (Losses) (Details) - Currency Swap - Fair Value Hedging - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain (loss) recognized in other comprehensive income (loss) | $ 588 | $ 0 |
Gain (loss) recognized on cross-currency swap in interest (expense) income, net (amount excluded from effectiveness testing) | 1,181 | 0 |
Gain (loss) recognized on cross-currency swap in other, net | 9,271 | 0 |
Gain (loss) recognized on intercompany debt in other, net | $ (9,271) | $ 0 |
Derivative Instruments and Hedging Activities - Schedule of Net Investment Hedge Gains (Losses) (Details) - Currency Swap - Net Investment Hedging - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain (loss) recognized in cumulative translation adjustment within other comprehensive income (loss) | $ 23,436 | $ 0 |
Interest Expense | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain (loss) recognized from the excluded components in interest (expense) income, net | $ 3,013 | $ 0 |
Derivative Instruments and Hedging Activities - Schedule of Non-Designated Derivative Gains (Losses) (Details) - Not Designated as Hedging Instruments - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | $ 2,573 | $ (1,433) |
Foreign currency hedging instruments | Other Nonoperating Income (Expense) | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | (15,073) | (20,522) |
Other Foreign Exchange Contracts | Other Nonoperating Income (Expense) | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | $ 17,646 | $ 19,089 |
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