ResMed Inc. reported its quarterly financial results for the period ended September 30, 2024. The company’s revenue increased by 12% to $1.23 billion, driven by strong sales of its sleep and respiratory medical devices. Net income rose to $243 million, or $1.65 per diluted share, compared to $214 million, or $1.44 per diluted share, in the same period last year. The company’s gross margin expanded to 64.1% from 62.5% due to improved product mix and pricing. ResMed’s operating expenses increased by 10% to $444 million, primarily due to investments in research and development and sales and marketing initiatives. The company’s cash and cash equivalents stood at $1.43 billion as of September 30, 2024, providing a strong foundation for future growth and investments.
ResMed’s Strong Performance Driven by Growth in Sleep and Respiratory Care and Residential Software Segments
ResMed, a global leader in medical devices and cloud-based software for respiratory disorders, reported impressive financial results for the three months ended September 30, 2024. The company’s net revenue increased 11% year-over-year to $1.22 billion, driven by growth across both its core Sleep and Breathing Health and Residential Care Software business segments.
Robust Growth Across Segments
ResMed’s Sleep and Breathing Health segment, which includes its devices and masks for treating sleep apnea and other respiratory conditions, saw net revenue increase 11% to $1.07 billion. This was driven by higher demand and unit sales for both devices and masks in the U.S., Canada, Latin America as well as Europe, Asia, and other international markets.
The company’s Residential Care Software segment, which provides cloud-based software platforms for home health and senior living providers, also delivered strong performance. Segment revenue grew 13% to $156.8 million, primarily due to continued growth in the home medical equipment (HME) and MEDIFOX DAN verticals.
Improved Profitability
ResMed’s gross margin expanded significantly, increasing from 54.4% in the prior year period to 58.6%. This was driven by manufacturing efficiencies, component cost improvements, and a reduction in amortization of acquired intangibles. The company’s non-GAAP gross margin, which excludes certain one-time items, was even higher at 59.2%.
Operating expenses increased 7% year-over-year, with selling, general and administrative (SG&A) expenses rising to $239.0 million and research and development (R&D) expenses increasing to $79.5 million. However, as a percentage of revenue, both SG&A and R&D declined, demonstrating ResMed’s ability to leverage its cost structure.
Strong Bottom-Line Performance
The combination of higher revenue and improved profitability translated to a 42% increase in net income to $311.4 million. Diluted earnings per share grew at the same pace, reaching $2.11 compared to $1.49 in the prior year period.
ResMed’s management team highlighted several factors contributing to the strong financial performance:
Solid Financial Position and Cash Flow
ResMed ended the quarter with a strong balance sheet, including $426.4 million in cash and cash equivalents. The company generated $325.5 million in cash from operations during the quarter, a 14% increase year-over-year.
ResMed has ample liquidity, with $1.5 billion available under its revolving credit facility in addition to the cash on hand. The company’s debt levels remain manageable, with $680 million outstanding under its credit facilities and senior notes.
Outlook and Strategic Initiatives
Looking ahead, ResMed remains optimistic about its growth prospects. The company recently announced a new operating model to accelerate long-term growth, with a focus on increasing the velocity of product development and sharpening its customer and brand focus.
ResMed continues to invest heavily in research and development, spending $79.5 million or 6.5% of revenue on R&D activities during the quarter. This includes the development and commercialization of new, innovative products and solutions that improve patient outcomes and create efficiencies for customers.
The company’s acquisition strategy has also been a key driver of growth, with the integration of Brightree, HEALTHCAREfirst, MatrixCare, and MEDIFOX DAN strengthening its Residential Care Software segment. ResMed remains open to future strategic acquisitions that can complement its core business.
Conclusion
ResMed’s strong financial performance in the first quarter of fiscal year 2025 demonstrates the company’s ability to capitalize on the growing demand for its sleep and respiratory care products as well as its residential care software solutions. With a solid balance sheet, ample liquidity, and a focus on innovation and strategic acquisitions, ResMed appears well-positioned to continue its trajectory of profitable growth.