MURRYSVILLE, Pa., Oct. 25 /PRNewswire-FirstCall/ -- RESPIRONICS,
INC. (NASDAQ:RESP) today announced record financial results for the
three months ended September 30, 2007. FINANCIAL RESULTS Three
Months Ended September 30, 2007 Net sales for the first quarter
totaled $311.6 million, which represents an increase of 17 percent
over the $266.6 million achieved in the first quarter a year ago.
The Company's recent acquisitions added approximately $3.4 million
of revenues during the quarter, primarily related to international
distributor acquisitions, and favorable changes in foreign currency
rates added approximately $0.9 million. Together, acquired revenues
and foreign currency rate changes represented less than two percent
of the current quarter revenue growth. Domestic revenues increased
from $181.6 million in the first quarter a year ago to $209.0
million in the current year's first quarter, an increase of 15
percent. The Company's domestic revenue gains were led by a
year-over-year increase of $22.5 million, or 16 percent in the
domestic Sleep & Home Respiratory Group. The Company achieved
18 percent growth in domestic sleep therapy products, driven by the
M Series line of sleep therapy devices including proprietary
breathing modalities like A-Flex(TM), and a broad range of patient
interface products including Optilife(TM) and the Company's
ComfortGel(TM) mask. The Company was also very pleased with its
revenue growth in Home Respiratory Care, and in particular a strong
performance in oxygen therapy in the current year's first quarter.
With positive contributions from Critical Care, Respiratory Drug
Delivery, as well as Children's Medical Ventures, the Company's
domestic Hospital Group revenues grew by 11 percent during the
first quarter to $48.2 million. International revenues totaled
$102.7 million for the first quarter, a 21 percent increase over
the $85.0 million reported a year ago, led by 24 percent growth in
sleep therapy products and substantial growth in Home Respiratory
Care. The Company also achieved growth in its Hospital Group
products in the international markets, driven by strong
performances in non-invasive ventilation as well as Respiratory
Drug Delivery. International revenues represented 33 percent of
total revenues during the current year's first quarter. On a global
basis, Sleep and Home Respiratory Group revenues grew by 19 percent
from $197.0 million to $235.1 million, led by 20 percent growth in
sleep therapy revenues that grew from $153.9 million to $184.3
million. Global Hospital Group revenues grew by 10 percent, from
$69.6 million last year to $76.5 million in the first quarter of
fiscal year 2008. Net income for the current quarter was $27.5
million, or $0.37 per diluted share, including stock compensation
expenses totaling $3.7 million on a pre- tax basis, or $0.03 per
diluted share after tax. This represents 22 percent earnings per
share growth compared to the $0.30 per diluted share reported in
the prior year first quarter. Net income in the prior year first
quarter was $22.1 million, including $3.0 million of stock
compensation expenses on a pre- tax basis, or $0.03 per diluted
share after tax. During the current year first quarter, the Company
reported a lower effective income tax rate of 27 percent resulting
primarily from tax planning efforts to capture incremental
extra-territorial income tax credits from prior years. These tax
planning efforts generated approximately $3.3 million of reduced
income taxes during the first quarter (which represents
approximately $4.3 million on a pre-tax basis, net of associated
professional tax service fees). During the current year first
quarter, the Company also generated approximately $2.0 million of
net foreign currency gains recorded in other income due to the
strengthening of foreign currencies against the U.S. Dollar.
Offsetting these gains, the Company incurred $5.4 million of
in-process research and development expenses related to an
equity-investment in a development stage sleep company and
accelerated approximately $0.9 of internal research and development
activity. Additionally, the Company made contributions to its
variable employee compensation plans at higher than planned levels.
These various expenses, as well as the income tax credit and
foreign currency gains, are included in the Company's GAAP-basis
$0.37 per diluted share. The Company's increase in earnings per
share in the current year is primarily the result of sales growth
and operating margin increases versus the prior year as well as
lower income tax expense. COMMENTS FROM MANAGEMENT Quarterly
Results John Miclot, President and Chief Executive Officer,
commented on the Company's results, "We are very pleased to be
reporting strong 17% growth in revenues and 22% growth in earnings
per share to start off the 2008 fiscal year. These results were
once again driven by very balanced performance across our various
business units and key geographic regions. Our results were
highlighted not only by an outstanding performance from our M
Series family of sleep therapy devices and our portfolio of patient
interfaces including the OptiLife(TM) mask, but also by strong
revenue growth globally in Home Respiratory Care and various
hospital product lines." Mr. Miclot continued, "Our global
performance in sleep therapy was driven by 18 percent domestic and
24 percent international growth for a worldwide increase of 20
percent, which is at the high-end of market growth. We are very
pleased with the continued success of several new technologies,
including the A-Flex(TM) breathing mode that is integrated into our
REMstar(R) Auto CPAP device and the BiPAP(R) autoSV(TM) unit that
is focused on the treatment of complex apnea patients. Continued
success from our recently introduced EverFlo(TM) Stationary Oxygen
Concentrator and EverGo(TM) Portable Oxygen Concentrator led to
exceptional growth in our Home Respiratory Care business unit
domestically and internationally. In the Hospital Group, we were
also very pleased with the balance and growth we achieved from
Critical Care, Respiratory Drug Delivery, and Children's Medical
Ventures, which all made nice contributions to the Company's first
quarter financial results," he added. "In addition to our
exceptional financial performance in the first quarter, we are also
pleased with investments we've made to expand our presence in the
global sleep and respiratory markets through both the introduction
of internally developed products as well as through strategic
acquisitions. We are continuing to make progress in research and
development in the obstructive sleep apnea market and expect to
release several new patient interfaces during fiscal year 2008;
work is also ongoing on new sleep therapy device platforms and
breathing algorithms. In addition, we are exploring exciting new
"white space" opportunities in the broader sleep market, including
our recently announced acquisition of Apollo Light Systems, Inc., a
privately held company and leading manufacturer of light therapy
systems for melatonin suppression and circadian rhythm sleep
disorders. Furthermore, substantial internal research and
development work is ongoing in our ventilation portfolio, with
product launches scheduled for fiscal year 2008." Mr. Miclot
concluded, "We continue to gain market share and momentum in the
international sleep therapy market, as exemplified by the 24
percent growth we achieved in the first quarter. We also continue
to execute on our international expansion initiatives with our
recent investment in Finland. In the past fifteen months, the
Company has acquired a direct presence in Norway, Denmark, Finland,
as well as Australia, and now conducts business in 141 countries
across the world. International expansion will continue to be a
very important part of the Company's strategy." Financial Position
The Company continues to maintain a strong balance sheet position,
with $322.1 million of cash and short-term investments as of
September 30, 2007, representing an increase of $14.9 million
compared to June 30, 2007. During the first quarter, the Company
made approximately $14.0 million of strategic investments and
acquisition-related payments. The Company acquired a majority
interest in an international distributor in July that provides
Respironics with a direct distribution channel in Finland, and it
also made equity investments in two companies in the sleep market.
During the quarter, the Company's accounts receivable days sales
outstanding were 62 days, up slightly from the 60 days achieved as
of June 30, 2007. The Company's long-term debt balance was $29.1
million as of September 30, 2007, compared to $26.4 million as of
June 30, 2007. Respironics' strong balance sheet positions the
Company to execute its strategy, which calls for optimizing the
Company's core growth drivers while investing in new areas of the
sleep and respiratory markets. Outlook In light of its strong
financial performance in the first quarter and continued positive
outlook for the remainder of fiscal year 2008, the Company is
raising revenue guidance to $1,360 million to $1,380 million and
refining earnings per share guidance to $1.93 to $1.98. These
earnings per share amounts include expected stock compensation
expense of approximately $14.5 million to $15.5 million on a
pre-tax basis, or approximately $0.11 to $0.12 per share after tax.
Respironics is a leading developer, manufacturer and distributor of
innovative products and programs that serve the global sleep and
respiratory markets. Focusing on emerging market needs, the Company
is committed to providing valued solutions to help improve outcomes
for patients, clinicians and health care providers. Respironics
markets its products in 141 countries and employs more than 5,100
associates worldwide. Further information can be found on the
Company's Web site: http://www.respironics.com/. The Company will
host a conference call at 8:30 a.m. Eastern Time today to discuss
these quarterly results, market trends and future outlook. The
conference call will be broadcast live over the Internet and can be
accessed by all interested parties from the Company's web site at
http://www.respironics.com/ or at http://www.companyboardroom.com/.
Please allow extra time prior to the call to visit the site and
download the streaming media software required to listen to the
Internet broadcast. A replay of the web cast will be available
following the call. FORWARD-LOOKING STATEMENT This document
contains forward-looking statements, including statements relating
to, among other things, developments in the healthcare industry;
the success of the Company's marketing, sales, and promotion
programs; future sales, acceptance, and quality of the Company's
products and programs; the results of clinical trials; the timing
and success of new product introductions; new product development;
anticipated cost savings; FDA and other regulatory requirements,
enforcement actions, product recalls or related field actions;
future results from acquisitions and strategic investments; growth
rates in foreign markets; regulations and other factors affecting
operations and sales outside the United States; foreign currency
fluctuations; the effects of a major natural disaster, cyber-attack
or other catastrophic event that results in the destruction or
disruption of any critical business or information technology
systems; customer consolidation and concentration; increasing price
competition and other competitive factors in the manufacture,
distribution, and sale of products; interest rate fluctuations;
expiration of intellectual property rights; intellectual property
and related litigation; other litigation; future levels of earnings
and revenues; the number of equity awards granted to employees and
changes in the Company's stock price; and third party
reimbursement; all of which are subject to change. Actual results
may differ materially from those described in any forward-looking
statements. Additional information on potential factors that could
affect the Company's financial results are included in the reports
filed with the SEC, including the reports on Form 10-K, 10-Q and
8-K. RESPIRONICS, INC. AND SUBSIDIARIES Condensed Statement of
Operations (Unaudited) For the three months ended September 30,
2007 and 2006: $ % GAAP GAAP Incr Incr 3 months 3 months ease ease
Dollars in thousands, except Ended Ended (Decr (Decr per share
amounts 09/30/07 09/30/06 ease) ease) Sales $311,638 $266,624
$45,014 17% Cost of goods sold 144,604 124,639 19,965 16% Gross
profit 167,034 141,985 25,049 18% Gross profit percentage 54% 53%
General & administrative expense 47,522 34,886 12,636 36%
Sales, marketing, & commission expense 63,216 57,565 5,651 10%
Research & development expense 18,058 14,513 3,545 24%
In-process research & development expense 5,424 0 5,424
Contribution to foundation 0 0 0 Restructuring &
acquisition-related expense 578 1,686 (1,108) Other income (5,224)
(1,985) 3,239 Net Income before income tax $37,460 $35,320 2,140 6%
Income tax 9,991 13,251 (3,260) (25%) Net Income $27,469 $22,069
5,400 24% Basic earnings per share 0.37 0.30 0.07 23% Basic shares
outstanding 73,863 72,835 1,028 Diluted earnings per share 0.37
0.30 0.07 22% Diluted shares outstanding 75,065 73,710 1,355
Product Sales Summary (Unaudited) Dollars in thousands Three months
ended 9/30/07 9/30/06 Domestic Sleep and Home Respiratory Group
$160,761 $138,258 Domestic Hospital Group 48,199 43,337
International Group 102,678 85,029 Total $311,638 $266,624
Condensed Balance Sheet (Unaudited) Dollars in thousands At At
9/30/07 6/30/07 Cash and cash equivalents $264,868 $231,830
Short-term investments 57,242 75,354 Trade accounts receivable
214,718 220,398 Inventories 184,071 172,671 Other current assets
77,195 76,025 Total current assets 798,094 776,278 Property, plant
and equipment (net) 165,217 155,953 Other assets, including
goodwill 310,155 294,589 Total assets $1,273,466 $1,226,820 Current
liabilities $239,691 $239,152 Long-term obligations 29,051 26,411
Other non-current liabilities 29,987 27,695 Shareholders' equity
974,737 933,562 Total liabilities and shareholders' equity
$1,273,466 $1,226,820 DATASOURCE: Respironics, Inc. CONTACT: Dan
Bevevino, Vice President & CFO, Respironics, Inc.,
+1-724-387-5235; or Joe Calabrese, General Contact,
+1-212-827-3772, Julie Tu, Analyst Information, +1-212-827-3776,
both of the Financial Relations Board Web site:
http://www.respironics.com/
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