• Revenue: $1.28 billion, an increase of 10% year-over-year.
• Gross Margin: Increased by 230 basis points to 59.2%.
• Net Income: Increased by 29%.
• Non-GAAP Earnings Per Share: Increased by 29%.
• Device Sales Growth: 11% globally on a constant currency basis.
• Masks and Accessories Sales Growth: 11% globally on a constant currency basis.
• SG&A Expenses: Increased by 9%, representing 18.8% of revenue.
• R&D Expenses: Increased by 10%, representing 6.3% of revenue.
• Cash Flow from Operations: $309 million.
• Capital Expenditure: $21 million.
• Cash Balance: $522 million at the end of the quarter.
• Dividend: Declared quarterly dividend of $0.53 per share.
• Share Buyback: Purchased approximately 307,000 shares for $75 million.

• Warning! GuruFocus has detected 5 Warning Sign with ATGE.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ResMed Inc (NYSE:RMD) reported a strong quarter with a 10% increase in global revenue, driven by consistent contributions across its sleep health, breathing health, and residential care software portfolio.
• The company achieved a 230 basis point expansion in non-GAAP gross margin to 59.2%, reflecting improved operating efficiencies.
• ResMed Inc (NYSE:RMD) saw double-digit growth in its masks and accessories business, supported by the rollout of Brightree ReSupply and SNAP technology.
• The company is actively investing in technology, including AI and ML, to enhance its digital health ecosystem and improve patient outcomes.
• ResMed Inc (NYSE:RMD) is expanding its global reach with the AirSense 11 platform, launching in new markets such as India, and planning further launches throughout 2025.

Negative Points

• Foreign currency movements negatively impacted revenue by approximately $2 million in the December quarter, with further impacts expected in Q3.
• SG&A expenses increased by 9%, driven by higher employee-related costs and marketing expenses, although they improved slightly as a percentage of revenue.
• R&D expenses also rose by 10%, primarily due to increased employee-related expenses, maintaining a similar percentage of revenue as the previous year.
• The company faces challenges in scaling home sleep testing and remote setup to accommodate potential new patient inflows, as sleep physicians in the US struggle with capacity.
• ResMed Inc (NYSE:RMD) anticipates potential impacts from global economic conditions, including currency fluctuations and tariffs, which could affect future financial performance.

Q & A Highlights

Q: Can you discuss the impact of foreign exchange (FX) on your margins and any expectations for future FX impacts? A: Brett Sandercock, CFO, noted a 30 basis points impact from FX this quarter, resulting in a $0.02 negative effect on EPS. Looking forward, FX impacts are expected to be relatively neutral on gross margins, with slight benefits anticipated in R&D and SG&A.

Q: How do you see the impact of GLP-1 drugs on your device sales, particularly in the US? A: CEO Michael Farrell mentioned that while GLP-1 drugs and consumer tech trends are raising awareness of sleep apnea, the impact on device sales is still in early stages. The company expects gradual patient flow increases over the next several quarters and years.

Q: Were there any bulk purchases or one-off events affecting device growth this quarter? A: Michael Farrell confirmed there were no bulk purchases or one-off events impacting device growth this quarter. He also noted that potential tariffs are not expected to affect ResMed due to their manufacturing locations.

Q: How is ResMed scaling home sleep testing and remote setups to accommodate potential new patients? A: Farrell highlighted the scalability of home sleep apnea testing as a flexible solution to meet increased demand. ResMed is partnering with sleep labs and home testing companies to ensure timely patient diagnosis and treatment.

Q: Can you provide insights into the growth rates of different businesses within your SaaS segment? A: Farrell stated that while specific breakdowns are not provided, the MEDIFOX DAN software vertical is performing strongly, and Brightree is in line with high-single-digit growth. The company is focusing investments on high-growth areas within its SaaS portfolio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.