ResMed Inc. (NYSE: RMD, ASX: RMD) today announced results for its quarter ended September 30, 2024.

First Quarter 2025 HighlightsAll comparisons are to the prior year period

  • Revenue increased by 11% to $1.2 billion; up 11% on a constant currency basis 
  • Gross margin improved 420 bps to 58.6%; non-GAAP gross margin improved 320 bps to 59.2%
  • Income from operations increased 34%; non-GAAP income from operations up 27%
  • Operating cash flow of $326 million
  • Diluted earnings per share of $2.11; non-GAAP diluted earnings per share of $2.20

“Our first-quarter fiscal year 2025 results reflect ongoing momentum and strong execution across all areas of our business,” said Mick Farrell, Chairman and CEO of ResMed. “We delivered 11% year-over-year revenue growth, and our focus on operational excellence resulted in another quarter of year-over-year margin expansion and a 34% increase in operating profit. As we celebrate 35 years of growth and innovation, our recently launched 2030 strategy will further enable us to transform sleep health, breathing health, and healthcare technology at home. By building on our leadership in connected digital health, we are driving better care, simplifying the health journey, and improving access to our therapies globally so even more people worldwide are empowered to live healthier, higher-quality lives using products and services they love.”

Financial Results and Operating Metrics

Unaudited; $ in millions, except for per share amounts

  Three Months Ended
  September 30,2024   September 30,2023   % Change   ConstantCurrency(A)
Revenue $ 1,224.5     $ 1,102.3       11 %     11 %
Gross margin   58.6 %     54.4 %     8      
Non-GAAP gross margin(B)   59.2 %     56.0 %     6      
Selling, general, and administrative expenses   239.0       222.9       7       7  
Research and development expenses   79.5       75.7       5       4  
Income from operations   387.3       289.0       34      
Non-GAAP income from operations(B)   406.4       318.8       27      
Net income   311.4       219.4       42      
Non-GAAP net income(B)   325.4       241.2       35      
Diluted earnings per share $ 2.11     $ 1.49       42      
Non-GAAP diluted earnings per share(B) $ 2.20     $ 1.64       34      
                           

(A) In order to provide a framework for assessing how our underlying businesses performed, excluding the effect of foreign currency fluctuations, we provide certain financial information on a “constant currency” basis, which is in addition to the actual financial information presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.

(B) See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

Discussion of First Quarter ResultsAll comparisons are to the prior year period unless otherwise noted

  • Revenue grew by 11 percent on a constant currency basis, driven by increased demand for our sleep devices and masks portfolio, as well as strong growth across our Residential Care Software business.
    • Revenue in the U.S., Canada, and Latin America, excluding Residential Care Software, grew by 11 percent.
    • Revenue in Europe, Asia, and other markets, excluding Residential Care Software, grew by 10 percent on a constant currency basis.
    • Residential Care Software revenue increased by 12 percent on a constant currency basis, reflecting continued organic growth in our Residential Care Software portfolio.
  • Gross margin increased by 420 basis points mainly due to manufacturing efficiencies and component cost improvements and an increase in average selling prices. Non-GAAP gross margin increased by 320 basis points due to the same factors.
  • Selling, general, and administrative expenses increased by 7 percent on a constant currency basis. The increase in SG&A expenses was mainly due to increases in employee-related expenses. SG&A expenses improved to 19.5 percent of revenue in the quarter, compared with 20.2 percent in the same period of the prior year.
  • Income from operations increased by 34 percent, and non-GAAP income from operations increased by 27 percent.
  • Net income for the quarter was $311 million and diluted earnings per share was $2.11. Non-GAAP net income increased by 35 percent to $325 million, and non-GAAP diluted earnings per share increased by 34 percent to $2.20, predominantly attributable to strong sales growth and gross margin improvement.
  • Operating cash flow for the quarter was $326 million, compared to net income in the current quarter of $311 million and non-GAAP net income of $325 million.
  • During the quarter, we paid $78 million in dividends and repurchased 222,000 shares for consideration of $50 million as part of our ongoing capital management.

Other Business and Operational Highlights

  • Celebrated 35 years of innovation and 25 years listed on the New York Stock Exchange (NYSE) by ringing the Opening Bell® at the NYSE on its listing anniversary.
  • Held its 2024 Investor Day and unveiled ResMed’s 2030 strategy to drive growth, profitability, and shareholder returns. As part of Investor Day, announced five-year revenue and earnings growth outlook, supported by ResMed’s plans to accelerate product and technology innovation, operational excellence, commercial execution, and financial strength. ResMed’s updated ambition is to help more than 500 million people achieve their full health potential in 2030.
  • ResMed operates two reporting units, historically named ‘Sleep and Respiratory Care’ and ‘SaaS’. In alignment with the 2030 Strategy announced during Investor Day in September, these reporting units have been renamed to Sleep and Breathing Health (formerly Sleep and Respiratory Care) and Residential Care Software (formerly SaaS). The methodology for attributing financial results to these reporting units remains unchanged. Revenue from prior periods is consistent and comparable to previous reporting.
  • Announced the upcoming launch of ResMed’s first fabric mask, the AirTouch N30i. With a fabric-wrapped frame featuring a soft, breathable, and moisture wicking design, the AirTouch N30i is designed to create a more natural and comfortable experience for users making it even easier to embrace CPAP therapy. AirTouch N30i will be available in the U.S. beginning next week.
  • Introduced several new patient-centric products encompassing digital and personalized solutions to enhance the therapy journey for sleep apnea patients. The innovations integrate with digital wearable devices and incorporate generative artificial intelligence to deliver a more personalized sleep health experience.

Dividend programThe ResMed board of directors today declared a quarterly cash dividend of $0.53 per share. The dividend will have a record date of November 7, 2024, payable on December 12, 2024. The dividend will be paid in U.S. currency to holders of ResMed’s common stock trading on the New York Stock Exchange. Holders of CHESS Depositary Interests (“CDIs”) trading on the Australian Securities Exchange will receive an equivalent amount in Australian currency, based on the exchange rate on the record date, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be November 6, 2024, for common stockholders and for CDI holders. ResMed has received a waiver from the ASX’s settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from November 6, 2024, through November 7, 2024, inclusive. 

Webcast detailsResMed will discuss its first quarter fiscal year 2025 results on its webcast at 1:30 p.m. U.S. Pacific Time today. The live webcast of the call can be accessed on ResMed’s Investor Relations website at investor.resmed.com. Please go to this section of the website and click on the icon for the “Q1 2025 Earnings Webcast” to register and listen to the live webcast. A replay of the earnings webcast will be accessible on the website and available approximately two hours after the live webcast. In addition, a telephone replay of the conference call will be available approximately three hours after the webcast by dialing +1 877-660-6853 (U.S.) or +1 201-612-7415 (outside U.S.) and entering the passcode 13749420. The telephone replay will be available until November 7, 2024.

About ResMedAt ResMed (NYSE: RMD, ASX: RMD) we pioneer innovative solutions that treat and keep people out of the hospital, empowering them to live healthier, higher-quality lives. Our digital health technologies and cloud-connected medical devices transform care for people with sleep apnea, COPD, and other chronic diseases. Our comprehensive out-of-hospital software platforms support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. By enabling better care, we improve quality of life, reduce the impact of chronic disease, and lower costs for consumers and healthcare systems in more than 140 countries. To learn more, visit ResMed.com and follow @ResMed.

Safe harbor statementStatements contained in this release that are not historical facts are “forward-looking” statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements – including statements regarding ResMed’s projections of future revenue or earnings, expenses, new product development, new product launches, new markets for its products, the integration of acquisitions, our supply chain, domestic and international regulatory developments, litigation, tax outlook, and the expected impact of macroeconomic conditions of our business – are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Additional risks and uncertainties are discussed in ResMed’s periodic reports on file with the U.S. Securities & Exchange Commission. ResMed does not undertake to update its forward-looking statements.

Condensed Consolidated Statements of Operations(Unaudited; $ in thousands, except for per share amounts)

  Three Months Ended
  September 30,2024   September 30,2023
       
Net revenue $ 1,224,509     $ 1,102,321  
       
Cost of sales   499,620       485,442  
Amortization of acquired intangibles(1)   7,670       8,908  
Astral field safety notification expenses(1)   —       7,911  
Total cost of sales $ 507,290     $ 502,261  
Gross profit $ 717,219     $ 600,060  
       
Selling, general, and administrative   238,979       222,874  
Research and development   79,524       75,710  
Amortization of acquired intangibles(1)   11,404       12,479  
Total operating expenses $ 329,907     $ 311,063  
Income from operations $ 387,312     $ 288,997  
       
Other income (expenses), net:      
Interest (expense) income, net $ (1,661 )   $ (14,957 )
Gain (loss) attributable to equity method investments   963       (3,895 )
Gain (loss) on equity investments(1)   (680 )     (602 )
Other, net   (2,437 )     2,648  
Total other income (expenses), net   (3,815 )     (16,806 )
Income before income taxes $ 383,497     $ 272,191  
Income taxes   72,142       52,769  
Net income $ 311,355     $ 219,422  
       
Basic earnings per share $ 2.12     $ 1.49  
Diluted earnings per share $ 2.11     $ 1.49  
Non-GAAP diluted earnings per share(1) $ 2.20     $ 1.64  
       
Basic shares outstanding   146,861       147,075  
Diluted shares outstanding   147,599       147,486  
               

(1) See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

Condensed Consolidated Balance Sheets(Unaudited; $ in thousands)

  September 30,2024   June 30,2024
Assets      
Current assets:      
Cash and cash equivalents $ 426,361     $ 238,361  
Accounts receivable, net   811,198       837,275  
Inventories   917,982       822,250  
Prepayments and other current assets   485,584       459,833  
Total current assets $ 2,641,125     $ 2,357,719  
Non-current assets:      
Property, plant, and equipment, net $ 560,211     $ 548,025  
Operating lease right-of-use assets   157,068       151,121  
Goodwill and other intangibles, net   3,364,630       3,327,959  
Deferred income taxes and other non-current assets   499,383       487,570  
Total non-current assets $ 4,581,292     $ 4,514,675  
Total assets $ 7,222,417     $ 6,872,394  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 249,278     $ 237,728  
Accrued expenses   365,749       377,678  
Operating lease liabilities, current   28,278       25,278  
Deferred revenue   157,188       152,554  
Income taxes payable   93,690       107,517  
Short-term debt   9,896       9,900  
Total current liabilities $ 904,079     $ 910,655  
Non-current liabilities:      
Deferred revenue $ 144,453     $ 137,343  
Deferred income taxes   83,521       79,339  
Operating lease liabilities, non-current   144,490       141,444  
Other long-term liabilities   83,270       42,257  
Long-term debt   667,578       697,313  
Total non-current liabilities $ 1,123,312     $ 1,097,696  
Total liabilities $ 2,027,391     $ 2,008,351  
Stockholders’ equity      
Common stock $ 758     $ 588  
Additional paid-in capital   1,924,584       1,896,604  
Retained earnings   5,225,111       4,991,647  
Treasury stock   (1,823,272 )     (1,773,267 )
Accumulated other comprehensive income   (132,155 )     (251,529 )
Total stockholders’ equity $ 5,195,026     $ 4,864,043  
Total liabilities and stockholders’ equity $ 7,222,417     $ 6,872,394  

Condensed Consolidated Statements of Cash Flows(Unaudited; $ in thousands)

  Three Months Ended
  September 30,2024   September 30,2023
Cash flows from operating activities:      
Net income $ 311,355     $ 219,422  
Adjustment to reconcile net income to cash provided by operating activities:      
Depreciation and amortization   44,730       44,934  
Amortization of right-of-use assets   8,980       8,508  
Stock-based compensation costs   20,156       18,510  
(Gain) loss attributable to equity method investments, net of dividends received   (963 )     3,895  
(Gain) loss on equity investments   680       602  
Changes in operating assets and liabilities:      
Accounts receivable, net   36,417       6,534  
Inventories, net   (70,254 )     26,911  
Prepaid expenses, net deferred income taxes and other current assets   (123 )     (42,015 )
Accounts payable, accrued expenses, income taxes payable and other   (25,440 )     (1,018 )
Net cash provided by (used in) operating activities $ 325,538     $ 286,283  
Cash flows from investing activities:      
Purchases of property, plant, and equipment   (17,840 )     (30,035 )
Patent registration and acquisition costs   (1,767 )     (10,831 )
Business acquisitions, net of cash acquired   —       (103,183 )
Purchases of investments   (1,350 )     (3,680 )
Proceeds from exits of investments   4,128       250  
Proceeds (payments) on maturity of foreign currency contracts   18,975       (1,501 )
Net cash provided by (used in) investing activities $ 2,146     $ (148,980 )
Cash flows from financing activities:      
Proceeds from issuance of common stock, net   8,383       983  
Purchases of treasury stock   (50,005 )     —  
Taxes paid related to net share settlement of equity awards   (389 )     (225 )
Payments of business combination contingent consideration   (855 )     (1,293 )
Proceeds from borrowings, net of borrowing costs   —       105,000  
Repayment of borrowings   (30,000 )     (185,000 )
Dividends paid   (77,891 )     (70,597 )
Net cash provided by (used in) financing activities $ (150,757 )   $ (151,132 )
Effect of exchange rate changes on cash $ 11,073     $ (4,962 )
Net increase (decrease) in cash and cash equivalents   188,000       (18,791 )
Cash and cash equivalents at beginning of period   238,361       227,891  
Cash and cash equivalents at end of period $ 426,361     $ 209,100  

Reconciliation of Non-GAAP Financial Measures(Unaudited; $ in thousands, except for per share amounts)

The measures “non-GAAP gross profit” and “non-GAAP gross margin” exclude amortization expense from acquired intangibles and restructuring expense related to cost of sales and are reconciled below:

  Three Months Ended
  September 30,2024   September 30,2023
       
Revenue $ 1,224,509     $ 1,102,321  
       
GAAP cost of sales $ 507,290     $ 502,261  
Less:Amortization of acquired intangibles(A)   (7,670 )     (8,908 )
Less: Astral field safety notification expenses(A)   —       (7,911 )
Non-GAAP cost of sales $ 499,620     $ 485,442  
       
GAAP gross profit $ 717,219     $ 600,060  
GAAP gross margin   58.6 %     54.4 %
Non-GAAP gross profit $ 724,889     $ 616,879  
Non-GAAP gross margin   59.2 %     56.0 %

The measure “non-GAAP income from operations” is reconciled with GAAP income from operations below:

  Three Months Ended
  September 30,2024   September 30,2023
       
GAAP income from operations $ 387,312     $ 288,997  
Amortization of acquired intangibles—cost of sales(A)   7,670       8,908  
Amortization of acquired intangibles—operating expenses(A)   11,404       12,479  
Astral field safety notification expenses(A)   —       7,911  
Acquisition-related expenses(A)   —       483  
Non-GAAP income from operations $ 406,386     $ 318,778  

Reconciliation of Non-GAAP Financial Measures(Unaudited; $ in thousands, except for per share amounts)

The measures “non-GAAP net income” and “non-GAAP diluted earnings per share” are reconciled with GAAP net income and GAAP diluted earnings per share in the table below:

  Three Months Ended
  September 30,2024   September 30,2023
       
GAAP net income $ 311,355     $ 219,422  
Amortization of acquired intangibles—cost of sales(A)   7,670       8,908  
Amortization of acquired intangibles—operating expenses(A)   11,404       12,479  
Astral field safety notification expenses(A)   —       7,911  
Acquisition-related expenses(A)   —       483  
Income tax effect on non-GAAP adjustments(A)   (5,071 )     (8,019 )
Non-GAAP net income(A) $ 325,358     $ 241,184  
       
GAAP diluted shares outstanding   147,599       147,486  
GAAP diluted earnings per share $ 2.11     $ 1.49  
Non-GAAP diluted earnings per share(A) $ 2.20     $ 1.64  
               

(A) ResMed adjusts for the impact of the amortization of acquired intangibles, field safety notification expenses, acquisition related expenses and associated tax effects from their evaluation of ongoing operations, and believes that investors benefit from adjusting these items to facilitate a more meaningful evaluation of current operating performance.

ResMed believes that non-GAAP diluted earnings per share is an additional measure of performance that investors can use to compare operating results between reporting periods. ResMed uses non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods. ResMed believes this information provides investors better insight when evaluating ResMed’s performance from core operations and provides consistent financial reporting. The use of non-GAAP measures is intended to supplement, and not to replace, the presentation of net income and other GAAP measures. Like all non-GAAP measures, non-GAAP earnings are subject to inherent limitations because they do not include all the expenses that must be included under GAAP.

Revenue by Product and Region(Unaudited; $ in millions, except for per share amounts)

  Three Months Ended
  September 30,2024 (A) September 30,2023 (A) % Change   ConstantCurrency(B)
U.S., Canada, and Latin America              
Devices $ 384.5     $ 345.9       11 %    
Masks and other   322.8       292.5       10      
Total U.S., Canada and Latin America $ 707.3     $ 638.4       11      
               
Combined Europe, Asia, and other markets              
Devices $ 241.3     $ 218.8       10 %     9 %
Masks and other   119.2       105.8       13       11  
Total Combined Europe, Asia and other markets $ 360.4     $ 324.7       11       10  
               
Global revenue              
Total Devices $ 625.8     $ 564.7       11 %     10 %
Total Masks and other   442.0       398.3       11       11  
TotalSleep and Breathing Health $ 1,067.7     $ 963.0       11       11  
               
Residential Care Software   156.8       139.3       13       12  
Total $ 1,224.5     $ 1,102.3       11       11  
               

(A) Totals and subtotals may not add due to rounding.

(B) In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we provide certain financial information on a “constant currency basis,” which is in addition to the actual financial information presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.

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