Resmed (RMD, Financial) has reported a robust financial performance for the third quarter of fiscal year 2025, with revenue reaching $1.3 billion. This figure slightly exceeds the market consensus, which had anticipated $1.28 billion.
The impressive results are attributed to a combination of substantial revenue growth, improved profit margins, and double-digit growth in earnings per share (EPS). The success is largely driven by strong customer demand for the company's leading products and software solutions, according to Mick Farrell, the company's CEO.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for ResMed Inc (RMD, Financial) is $263.10 with a high estimate of $295.00 and a low estimate of $195.00. The average target implies an upside of 22.69% from the current price of $214.44. More detailed estimate data can be found on the ResMed Inc (RMD) Forecast page.
Based on the consensus recommendation from 19 brokerage firms, ResMed Inc's (RMD, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for ResMed Inc (RMD, Financial) in one year is $287.86, suggesting a upside of 34.24% from the current price of $214.44. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the ResMed Inc (RMD) Summary page.
Key Business Developments
Release Date: January 30, 2025
- 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.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ResMed Inc (RMD, Financial) 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 (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 (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 (RMD) anticipates potential impacts from global economic conditions, including currency fluctuations and tariffs, which could affect future financial performance.
