ResMed Inc (RMD) Q2 2025 Earnings Report

- Revenue: $1.282 billion, +10% YoY, +4.7% QoQ; constant currency growth +10% YoY. FX negatively impacted revenue by about $2 million in Q2 and is expected to subtract $15–$20 million from Q3 revenue at current rates.
- Gross margin: 59.2% in the December quarter, up 230 bps YoY; sequential margin flat vs. prior quarter due to currency headwinds (~30 bps).
- Operating margin: 32.5% (operating income of $417.242 million; YoY improvement in line with gross margin expansion).
- Net income and profitability: Net income of $344.622 million, +29% YoY; diluted EPS of $2.34, +29% YoY; net income margin ~26.9%.
- Cash flow and liquidity: Operating cash flow of $309 million; capex $21 million; free cash flow around $289.7 million; cash balance $522 million; gross debt $673 million, net debt $151 million; approx. $1.5 billion revolver available.
- Shareholder returns: quarterly dividend of $0.53 per share; ~307k shares repurchased for $75 million; ongoing buyback target ~$75 million per quarter in FY2025.
- Segments and regional performance: Device sales +double-digit YoY; U.S./Canada/Latin America devices +12% YoY; Europe/Asia/ROW devices +9% YoY; masks/accessories up ~12%; Residential care software revenue +8% (notably MEDIFOX/DAN).
- 2025 strategic deltas: AirSense 11 launched in India with more country launches planned in 2025; AirSense 10 remains a meaningful contributor; Brightree ReSupply and Snap expanding in U.S. and globally; fabric-based AirTouch N30i launched; ongoing collaboration with Apple (Vision Pro Kontor Head Strap); continuous investment in R&D at ~6–7% of revenue.
- Outlook and guidance: Gross margin expected to be 59–60% for 2H FY25; SG&A 18–20% of revenue; R&D 6–7% of revenue; effective tax rate ~19–21%; FX headwinds recognized; 2Q results support a durable growth trajectory driven by core devices, software and ReSupply ecosystem.

- Strategy and growth drivers: Management reiterated a three-pillar plan (grow/differentiate core sleep health and breathing health; expand adjacencies such as COPD/COMISA; leverage digital health leadership). Mick Farrell emphasized the convergence of medtech and consumer tech and the company’s focus on AI and ML-enabled solutions.
- Margin discipline and operational efficiency: Brett Sandercock highlighted a gross-margin expansion of 230 bps to 59.2% YoY, aided by manufacturing/logistics efficiencies and cost improvements, with a plan for 59–60% in 2H FY25 and SG&A under 18–20% of revenue; R&D at 6–7% of revenue.
- MACRO-driven demand and GLP-1 tailwinds: Farrell described GLP-1 (Zepbound SURMOUNT-OSA) as a potential driver of patient flow into sleep medicine, noting that early CME efforts are underway and that the effect is expected to be durable over 1–3+ years. He also cited consumer wearables (Apple/Samsung) as a long-term demand-generation engine for sleep apnea awareness.
- Operational capacity and go-to-market: The company is expanding home testing and remote setup capabilities (NightOwl, ApneaLink Air) and intends to scale home sleep testing through partnerships, to reduce test wait times and improve conversion from referral to therapy.
- Competitive positioning and ecosystem leverage: ResMed highlighted its integrated digital health ecosystem (AirView, Brightree, myAir, MEDIFOX, MatrixCare) and the importance of ReSupply/Snap to drive stickiness and long-term lifetime value. Management stressed brand equity and a global footprint across 140 countries and a superior user experience as competitive advantages.

ResMed enters the back half of FY2025 with a disciplined cost structure, margin expansion trajectory, and a broad digital health platform that enhances patient engagement and stickiness. The QQ2 2025 results demonstrate durable revenue growth (10% YoY), robust gross margin expansion, and robust cash flow generation, underpinning a compelling long-term investment thesis grounded in three pillars: (1) growing/differentiating the core sleep/breathing health business; (2) expanding into adjacencies (COPD, COMISA, insomnia) and home-based care ecosystems; (3) leveraging leadership in digital health to improve outcomes for patients, providers, and payers. The company’s guidance for 2H FY25 (gross margin 59–60%, SG&A 18–20% of revenue, R&D 6–7% of revenue) suggests continued leverage and operating margin expansion, albeit with FX headwinds and currency volatility as a near-term risk. The GLP-1 tailwind (SURMOUNT-OSA) and the growing integration with consumer wearables present a potential, durable upside in patient inflows and adherence, which could translate into stronger ReSupply/maintenance revenue and long-term LTV. However, investors should monitor FX trajectories, reimbursement developments for GLP‑1 indications, and the ramp of adjacencies inside the 2030 strategy. Relative to medtech peers, ResMed’s premium valuations (P/E around mid-20s, P/B ~6.4, EV/EBIT ~70) reflect its strong growth potential, digital health platform, and cash-generative profile, though it remains sensitive to multi-quarter FX swings and regulatory dynamics. Overall, the stock offers a favorable risk-adjusted profile for investors seeking exposure to a leader at the intersection of medical devices, software-as-a-service revenue, and a high-growth health tech ecosystem.