MURRYSVILLE, Pa., April 26 /PRNewswire-FirstCall/ -- RESPIRONICS,
INC. (NASDAQ:RESP) today announced record financial results for the
three months and nine months ended March 31, 2007. FINANCIAL
RESULTS Three Months Ended March 31, 2007 Net sales for the third
quarter totaled $307.4 million, up 15 percent over the $267.3
million achieved in the third quarter a year ago. Domestic revenues
increased from $185.0 million in the third quarter a year ago to
$206.9 million in the current year's third quarter, an increase of
12 percent. The Company's domestic revenue gains were led by a
year-over-year increase of $18.8 million, or 18 percent, in
domestic sleep therapy products. The Company's domestic Hospital
Group revenues grew by 14 percent during the third quarter. This
revenue gain included 21 percent growth in hospital ventilation,
which increased from $19.9 million last year to $24.0 million in
the current year third quarter, led by our BiPAP(R) Vision(R)
non-invasive ventilator. International revenues totaled $100.5
million for the third quarter, a 22 percent increase over the $82.3
million reported a year ago, led by 31 percent growth in the sleep
therapy market. The Company also achieved 25 percent growth in its
hospital products in the international markets, driven by strong
performance in ventilation as well as respiratory drug delivery
products. International revenues represented 33 percent of total
revenues during the current year's third quarter. On a global
basis, sleep therapy revenues grew by 21 percent during the third
quarter, from $142.6 million to $172.4 million. Global hospital
ventilation sales grew by 21 percent, from $33.5 million last year
to $40.7 million in the third quarter of fiscal year 2007. The
Company also experienced another strong quarter of global revenue
growth in Respiratory Drug Delivery, which posted 24 percent growth
on prior year revenues of $14.9 million, to $18.5 million in the
current year third quarter. Net income for the current quarter was
$34.1 million, or $0.46 per diluted share, including stock
compensation expenses totaling $3.2 million on a pre- tax basis, or
$0.02 per diluted share after tax. This represents 21 percent
earnings per share growth compared to the $0.38 per diluted share
reported in the prior year third quarter. The prior year third
quarter included $3.1 million of stock compensation expenses on a
pre-tax basis, or $0.03 per diluted share after tax. Excluding the
impact of stock compensation expense in the current year third
quarter, net income was $36.2 million, or $0.48 per diluted share.
This represents a 19 percent increase over the $0.41 per diluted
share reported a year ago, excluding stock compensation expenses.
During the current year third quarter, the Company reported a lower
effective income tax rate of 24 percent resulting primarily from
favorable resolution of certain tax matters related to a prior year
transaction that were previously accrued in the consolidated
balance sheet. This lower tax rate resulted in approximately $5.4
million of reduced income taxes during the third quarter, compared
to income tax expense at the Company's normal effective income tax
rate. This one-time tax benefit was more than offset by various
expenses recorded during the quarter to accelerate certain
investment opportunities and other items. The Company made a $2.5
million contribution to the Respironics Sleep and Respiratory
Research Foundation (the "Foundation") that will be used to
increase education and awareness and advance basic research in the
fields of sleep and respiratory medicine. The Company also incurred
$1.6 million of additional third party administrator costs for
back- office administration of its previously announced legacy
humidifier recall, as well as $1.0 million of restructuring and
acquisition-related expenses, primarily associated with the
restructuring of operations at certain manufacturing facilities and
the integration of acquired companies. The Company's research and
development expenses also increased by 19 percent compared to last
year, as approximately $0.5 million of clinical trials and research
projects were accelerated during the third quarter. The Company
also accrued additional amounts for incentive compensation during
the quarter. These expenses, as well as the income tax credit, are
included in both the Company's GAAP-basis $0.46 per diluted share
and the non-GAAP $0.48 per diluted share excluding stock
compensation expenses reported above. 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. With the financial information
included in this press release, the Company provides a tabular
reconciliation of GAAP net income with net income excluding the
impact of stock compensation expenses. Nine Months Ended March 31,
2007 For the nine months ended March 31, 2007, net sales increased
to $862.7 million, a 13 percent increase compared to $765.4 million
from the last year's comparable nine-month period. Net income for
the nine months ended March 31, 2007 was $85.7 million, or $1.16
per diluted share, including stock compensation expenses totaling
$9.3 million on a pre-tax basis, or approximately $0.08 per diluted
share after tax. Excluding the impact of stock compensation
expenses in the current year, net income was $92.0 million, or
$1.24 per diluted share. This represents a 19 percent increase over
the $1.04 per diluted share reported a year ago, excluding the
impact of stock compensation expenses. 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 third quarter results driven by the full
release of our new products for sleep therapy as well as solid
growth across our other business units. Our results were
highlighted not only by an outstanding performance from our M
Series family of devices and our new OptiLife(TM) mask, but also by
strong revenue growth globally from our ventilation portfolio and
our respiratory drug delivery business unit. Our global performance
in sleep therapy was driven by 18 percent domestic and 31 percent
international growth for worldwide growth of 21 percent, outpacing
market growth on a global basis. In the ventilation area,
noninvasive ventilation continues to grow in acceptance and
application; and as the market leader, we are positioned for
continued growth in this exciting market. Our hospital ventilation
revenues increased by 21 percent domestically and 22 percent in our
international markets. We will continue to focus on the positive
clinical outcomes and cost benefits of noninvasive ventilation
versus traditional ventilation therapy. In respiratory drug
delivery, we have continued to introduce our technologies into
additional international markets where we are addressing the market
needs with our unique drug delivery solutions," he noted. Mr.
Miclot added, "It is very gratifying to see this balanced growth
across the Company, reflecting the continued success of our
strategy which calls for us to maintain our leadership in our core
markets and also invest in and generate additional growth drivers
for the Company. We are especially pleased to have achieved sleep
therapy growth that demonstrates a reacceleration of our revenues
in the domestic marketplace. Our international team's performance
has continued to outpace the market and they have once again
delivered exceptional growth in this key market segment." Mr.
Miclot continued, "Building upon the momentum we achieved during
the third quarter, we are currently introducing two new
technologies for the sleep therapy market. The first of these, the
BiPAP(R) autoSV(TM) unit is focused on the treatment of complex
apnea patients. Our autoSV(TM) unit, which has been successfully
marketed in the European market for several years, is now available
in the domestic marketplace. The second recent addition to our
portfolio of sleep technologies is the A-Flex(TM) breathing mode
now integrated into our REMstar(R) Auto CPAP device. This
innovative breathing mode provides unique therapy by delivering a
pressure pattern that matches the patients' entire breathing cycle.
During inhalation, A-Flex(TM) works with the auto algorithm to
provide inspiratory support that varies with the patient's pressure
level. During exhalation, A-Flex(TM) provides pressure relief and
comfort similar to C-Flex(TM). Our proprietary A-Flex(TM) breathing
mode achieves optimal performance when used in combination with our
OptiLife(TM) mask, and together, these two innovative technologies
are combined to form System One(TM), a combination focused on
delivering maximum comfort and compliance," Mr. Miclot concluded.
Financial Position The Company continues to maintain a strong
balance sheet position, with $318.7 million of cash and short-term
investments as of March 31, 2007, representing an increase of $41.4
million compared to December 31, 2006. This increase in cash and
short-term investments was achieved after the Company made $7.4
million of strategic investments and acquisition-related payments
during the quarter, including the previously announced acquisition
of the homecare business of our Australian customer, Mayo
Healthcare Group Pty Ltd. During the quarter, the Company's
accounts receivable days sales outstanding were reduced to 60 days
from 62 days as of December 31, 2006. The Company's long-term debt
balance was $26.9 million as of March 31, 2007, compared to $25.6
million as of December 31, 2006. As previously reported, subsequent
to March 31, 2007 the Company invested approximately $23 million of
cash to acquire the operating assets of the J. H. Emerson Company
(Emerson). The Emerson acquisition further expands the Company's
portfolio of home respiratory care products and will enable
Respironics to better serve the needs of respiratory impaired
patients. Respironics and Emerson have had a long-standing
relationship, as the Company has been a distributor of Emerson's
primary product line for several years. In addition to Emerson, the
Company acquired a majority interest in an international
distributor in April that provides it with a direct distribution
channel in Denmark. 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 For fiscal year 2007, the
Company is comfortable with earnings per share estimates (exclusive
of stock compensation expense) of approximately $1.74 to $1.76.
Revenue expectations for the year are approximately $1,180 million
to $1,190 million. Earnings per share estimates for the quarter
ending June 30, 2007 are in the range of $0.50 to $0.52. This
earnings per share outlook does not include the impact of FASB No.
123(R), "Share-Based Payment." During the 2007 fiscal year, the
Company expects to incur approximately $12.3 million to $12.8
million of stock compensation expense on a pre-tax basis, or $0.11
to $0.12 per share after tax. The Company expects to incur $3.0
million to $3.5 million of stock compensation expense on a pre-tax
basis, or $0.03 per share after tax during the fourth quarter of
the 2007 fiscal year. The actual expenses recorded during the 2007
fiscal year may fluctuate based on factors such as the actual
number of equity awards granted to employees and changes in the
Company's stock price and interest rates. 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 131 countries and employs more than 4,900 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 & Reconciliation of Non-GAAP Financial Measures
(Unaudited) (In thousands, except per share amounts) In managing
its business, Respironics makes use of certain non-GAAP financial
measures in evaluating the Company's results of operations from
core operations. The measure, "net income, excluding the impact of
stock compensation expenses," is reconciled with GAAP net income in
the tables below. For the three and nine months ended March 31,
2007: GAAP Non-GAAP 3 months 3 months Ended FAS 123 R Ended Fiscal
Year 2007 3/31/07 Impact 3/31/07 Sales $307,390 $307,390 Cost of
goods sold 142,962 (172) 142,790 Gross profit 164,428 172 164,600
General & administrative expense 43,762 (2,101) 41,661 Sales,
marketing, & commission expense 58,729 (669) 58,060 Research
& development expense 16,793 (234) 16,559 Contribution to
foundation 2,500 2,500 Restructuring & acquisition-related
expense 977 977 Other income (3,104) (3,104) Net Income before
income tax $44,771 $3,176 $47,947 Income tax 10,720 1,038 11,758
Net Income $34,051 $2,138 $36,189 Basic earnings per share 0.46
0.49 Basic shares outstanding 73,417 73,417 Diluted earnings per
share 0.46 0.48 Diluted shares outstanding 74,302 492 74,794 GAAP
Non-GAAP 9 months 9 months Ended FAS 123 R Ended Fiscal Year 2007
3/31/07 Impact 3/31/07 Sales $862,677 $862,677 Cost of goods sold
401,745 (508) 401,237 Gross profit 460,932 508 461,440 General
& administrative expense 117,072 (6,168) 110,904 Sales,
marketing, & commission expense 171,158 (1,984) 169,174
Research & development expense 47,045 (609) 46,436 Contribution
to foundation 2,500 2,500 Restructuring & acquisition-related
expense 3,864 3,864 Other income (7,944) (7,944) Net Income before
income tax $127,237 $9,269 $136,506 Income tax 41,518 3,007 44,525
Net Income $85,719 $6,262 $91,981 Basic earnings per share 1.17
1.26 Basic shares outstanding 73,092 73,092 Diluted earnings per
share 1.16 1.24 Diluted shares outstanding 73,960 451 74,411 For
the three and nine months ended March 31, 2006: GAAP Non-GAAP 3
months 3 months Ended FAS 123 R Ended Fiscal Year 2006 3/31/06
Impact 3/31/06 Sales $267,312 $267,312 Cost of goods sold $120,599
(269) $120,330 Gross profit 146,713 269 146,982 General &
administrative expense 38,079 (1,952) 36,127 Sales, marketing,
& commission expense 50,725 (681) 50,044 Research &
development expense 14,107 (190) 13,917 Contribution to foundation
0 0 Restructuring & acquisition-related expense 407 407 Other
income (1,193) (1,193) Net Income before income tax $44,588 $3,092
$47,680 Income tax 16,726 886 17,612 Net Income $27,862 $2,206
$30,068 Basic earnings per share 0.38 0.41 Basic shares outstanding
72,541 72,541 Diluted earnings per share 0.38 0.41 Diluted shares
outstanding 73,705 275 73,980 GAAP Non-GAAP 9 months 9 months Ended
FAS 123 R Ended Fiscal Year 2006 3/31/06 Impact 3/31/06 Sales
$765,435 $765,435 Cost of goods sold 343,310 (640) 342,670 Gross
profit 422,125 640 422,765 General & administrative expense
119,939 (5,661) 114,278 Sales, marketing, & commission expense
151,918 (2,122) 149,796 Research & development expense 41,140
(548) 40,592 Contribution to foundation 1,500 1,500 Restructuring
& acquisition-related expense 1,720 1,720 Other income (7,207)
(7,207) Net Income before income tax $113,115 $8,971 $122,086
Income tax 42,623 2,549 45,172 Net Income $70,492 $6,422 $76,914
Basic earnings per share 0.98 1.07 Basic shares outstanding 72,190
72,190 Diluted earnings per share 0.96 1.04 Diluted shares
outstanding 73,537 302 73,839 This press release includes diluted
earnings per share, excluding the impact of stock compensation
expenses, which is a non-GAAP financial measure as defined by the
Securities and Exchange Commission. The presentation of diluted
earnings per share, excluding the impact of stock compensation
expenses, is not in accordance with, or a substitute for, GAAP and
may be different from, or inconsistent with, non-GAAP financial
measures used by other companies. Management believes that the
presentation of diluted earnings per share, excluding the impact of
stock compensation expenses facilitates a fuller analysis of the
Company's results of operations, particularly in evaluating
performance period-over-period. Additionally, management uses
diluted earnings per share, excluding the impact of stock
compensation expenses internally in financial planning, to monitor
Company performance, and in evaluating management performance.
Product Sales Summary (Unaudited) (Dollars in thousands) Three
months ended Nine months ended 3/31/07 3/31/06 3/31/07 3/31/06
Domestic Sleep and Home Respiratory Group $150,813 $135,643
$427,623 $386,899 Domestic Hospital Group 56,122 49,337 154,069
140,978 International Group 100,455 82,332 280,985 237,558 Total
$307,390 $267,312 $862,677 $765,435 Condensed Balance Sheet
(Unaudited) (Dollars in thousands) At At 3/31/07 6/30/06 Cash and
cash equivalents $270,026 $259,513 Short-term investments 48,644
5,838 Trade accounts receivable 205,924 187,502 Inventories 163,087
124,149 Other current assets 73,797 65,090 Total current assets
761,478 642,092 Property, plant and equipment (net) 150,543 137,943
Other assets, including goodwill 255,086 237,343 Total assets
$1,167,107 $1,017,378 Current liabilities $229,761 $211,042
Long-term obligations 26,891 26,756 Other non-current liabilities
22,141 15,132 Shareholders' equity 888,314 764,448 Total
liabilities and shareholders' equity $1,167,107 $1,017,378
DATASOURCE: Respironics, Inc. CONTACT: Dan Bevevino, Vice President
& CFO of RESPIRONICS, INC., +1-724-387-5235, or Joe Calabrese
or Julie Tu, both of Financial Relations Board, +1-212-827-3776,
both for RESPIRONICS, INC. Web site: http://www.respironics.com/
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