Executive Summary
- ResMed reported a strong first quarter of fiscal 2025, with revenue of $1.2245 billion, up 11% year over year, and a gross margin of 59.2%, up 320 basis points from the prior year. Operating income rose to $387.3 million (operating margin ~31.6%), and net income reached $311.4 million (net margin ~25.4%), delivering GAAP EPS of $2.12 and nonāGAAP diluted EPS of $2.11. Cash flow from operations was $325.5 million, with free cash flow of $305.9 million, supporting a cash balance of $426.4 million and net debt of $0.251 billion after a $30 million debt repayment. The company also announced a quarterly dividend of $0.53 per share and a buyback of $50 million in the quarter, with a plan to run about $75 million per quarter going forward. This highlights resilient profitability and substantial capital return capability even as the company accelerates a longerāterm digital health agenda.
- Management attributed the margin expansion to manufacturing efficiencies, component cost improvements, and higher average selling prices, while continuing to monitor freight and currency headwinds. They guided gross margins to remain in the 59ā60% range for fiscal 2025 and reiterated ongoing investments in SG&A efficiency, R&D intensity, and a disciplined approach to tuckāin acquisitions and buybacks.
- Strategic catalysts highlighted by management include the ramp of the AirSense 11 platform, strong performance in masks and accessories via ReSupply, and a growing corporate focus on digital health ecosystems (AirView, myAir, Brightree, MatrixCare, Somnoware, and NightOwl). The company also discussed favorable macro tailwinds from GLPā1 therapies and consumer wearables, which they believe will drive demand for sleep health and breathing health solutions, as well as the potential to expand diagnostic reach via NightOwl integration with myAir and the ongoing Dawn AI consumer product.
- Looking ahead, ResMed outlined a threeāpillar 2030 growth framework: (1) differentiating and expanding core sleep/breathing health leadership, (2) expanding into adjacent spaces, and (3) leveraging digital health leadership to improve outcomes and lower costs. The investment thesis rests on continued revenue growth, margin resilience, expanding cash flow and ROIC, and a disciplined capital allocation framework focused on R&D, tuckāin acquisitions, and buybacks.
Key Performance Indicators
Key Insights
Revenue: $1,224,509,000 in Q1 FY2025, up 11% YoY (constant currency +11%); Gross margin: 59.2% (+320 bps YoY); Operating income: $387,312,000 (operating margin ā31.63%); Net income: $311,355,000 (net margin ā25.43%); Diluted EPS: $2.11; GAAP EPS: $2.12; Cash flow from operations: $325,538,000; Free cash flow: $305,931,000; Capital expenditures: $19.6 million; Net debt: $251 million; Cash at period end: $426.36 million; Debt repayments: $30 million; Dividend per share: $0.53; Share buybacks: ...
Financial Highlights
Revenue: $1,224,509,000 in Q1 FY2025, up 11% YoY (constant currency +11%); Gross margin: 59.2% (+320 bps YoY); Operating income: $387,312,000 (operating margin ā31.63%); Net income: $311,355,000 (net margin ā25.43%); Diluted EPS: $2.11; GAAP EPS: $2.12; Cash flow from operations: $325,538,000; Free cash flow: $305,931,000; Capital expenditures: $19.6 million; Net debt: $251 million; Cash at period end: $426.36 million; Debt repayments: $30 million; Dividend per share: $0.53; Share buybacks: $50 million in the quarter; Liquidity: approximately $1.5 billion available under revolver; Geographical mix (exāResidential Care Software): US, Canada, Latin America +11% YoY; Europe, Asia, and ROW +10% YoY; Device sales growth: +10% YoY; Masks and other sales growth: +11% YoY; Residential Care Software revenue: +12% YoY; 2025E gross margin target: 59ā60%; SG&A as % of revenue: 18ā20%; R&D as % of revenue: 6ā7%; Effective tax rate: 19ā21%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.22B |
27.15% |
0.11% |
| Gross Profit |
717.22M |
19.52% |
1.84% |
| Operating Income |
387.31M |
34.02% |
1.60% |
| Net Income |
311.36M |
41.90% |
6.54% |
| EPS |
2.12 |
42.28% |
6.53% |
Key Financial Ratios
operatingProfitMargin
31.6%
operatingCashFlowPerShare
$2.22
freeCashFlowPerShare
$2.08
Management Commentary
- Growth drivers and strategic priorities highlighted by management include continued doubleādigit growth across devices and masks, expansion of the AirSense 11 platform, and the role of ReSupply programs in improving adherence and outcomes. Mick Farrell emphasized āRevenue grew by 11%ā and a commitment to āongoing investments in both SG&A and R&D, resulting in very strong profit performance.ā
- The management team discussed the monetization of digital health assets and AI initiatives, including Dawn (AI consumer product) and NightOwl integration with myAir, which reportedly reduced live contact center queries by 40% and expanded diagnostic capabilities. Farrell stated: āDawnā¦ after just a few months of Dawn being launched into our U.S. market, we've seen 25% of visitors initiate a session with Dawn. This has led to an extraordinary 40% reduction in the volume of direct-to-live human contact center queries.ā
- Glen/GLPā1 tailwinds were described as meaningful; a realāworld data analysis (n=989,000) showed that patients with GLPā1 prescriptions and PAP therapy have higher uptake and adherence to PAP therapy, implying a potential growth channel for sleep apnea therapy demand. Farrell noted: āPeople prescribed a GLPā1 and PAP therapy have 10.8 absolute percentage points more likelihood to commence positive airway pressure therapyā¦ after 12 months, the ReSupply rate for patients with GLPā1s and PAP prescriptions is 3.2 percentage points higher, and at 24 months it expands to 5.3 points.ā
- The AirSense 11 ramp and the N30i fabric mask launch were underscored as nearāterm catalysts, with Farrell describing the N30i as a āgame changerā and signaling its initial rollout next week. He also stressed the longāterm opportunity to apply fabric wrapping to other masks, while acknowledging higher manufacturing costs and potential price premiums.
- Management affirmed the threeāpillar ResMed 2030 strategy: (1) differentiating and growing core sleep/breathing health; (2) expanding into adjacencies (insomnia, COPD, neuromuscular disease); (3) leveraging digital health leadership to improve outcomes and reduce healthcare system costs. Farrell suggested the company is targeting over 500 million people empowered by 2030, supported by a cloudāconnected device base (~27 million) and extensive data in the cloud (20 billion nights).
"Revenue grew by 11%, reflecting strong demand for sleep health and breathing health medical devices, our masks and accessories, as well as our residential care software offerings."
ā Mick Farrell
"AirTouch N30i is ResMed's first mask with a fabric-wrapped frame and a fabric-based patient interfaceā¦ this technology will set a new standard for CPAP, APAP, and bilevel patient interface therapy and will help more people love their therapy."
ā Mick Farrell
Forward Guidance
- Gross margin is expected to stay in the 59%ā60% range for fiscal year 2025, reflecting ongoing manufacturing efficiencies and favorable pricing dynamics, though freight and currency headwinds are noted risks. The company outlined SG&A as a percentage of revenue in the 18%ā20% range and R&D in the 6%ā7% range for FY2025, implying disciplined expense management alongside investment in growth initiatives.
- Cash flow remains a key strength: Q1 operating cash flow of $326 million supported a robust balance sheet (cash $426 million; net debt $251 million; revolver availability ~$1.5 billion). Management signaled continued capital returns, including a quarterly dividend of $0.53 per share and a plan to buy back about $75 million of stock per quarter for the remainder of fiscal 2025, designed to offset equity vesting dilution.
- M&A/Tuckāin strategy remains a core growth vector. Mick highlighted examples like Snap Technologies and Somnoware, and NightOwl (wearable home sleep apnea test) with NightOwl integration into myAir, underscoring a disciplined, smallātoāmidāsized acquisition rubric (potential tuckāins in the range of $100ā$500 million, depending on strategic fit).
- The longāterm outlook remains positive given secular tailwinds in sleep health, the expanding digital health ecosystem, and the potential downstream impact of GLPā1 therapy and consumer wearables on sleep health awareness and diagnosis. Key uncertainties include the pace of GLPā1 adoption in realāworld practice, payer reimbursement dynamics, FX volatility, and freight costs, all of which could influence margins and inflationary pressure on supply chain costs.