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Core Insights - ResMed Inc. is a leading company in the medical products industry, specializing in solutions for sleep apnea and respiratory conditions, with a strong financial performance and market competitiveness [1] Financial Performance - ResMed reported earnings per share (EPS) of $2.55 for the quarter ending September 2025, exceeding the estimated $2.51 and showing a significant improvement from $2.20 in the same quarter last year, resulting in an earnings surprise of +2.41% [2][6] - The company's revenue for the same quarter reached $1.34 billion, surpassing the estimated $1.33 billion and reflecting a 9.1% increase compared to the previous year, with a positive surprise of 0.94% [3][6] Operational Metrics - ResMed's gross margin improved by 290 basis points to 61.5%, while the non-GAAP gross margin rose to 62.0%, indicating effective cost management [4] - Income from operations increased by 15%, with non-GAAP income from operations up by 19%, showcasing operational excellence [4] Financial Health - The company maintains a strong balance sheet with a debt-to-equity ratio of approximately 0.15, indicating low debt levels relative to equity [5] - A current ratio of around 3.44 demonstrates ResMed's capability to cover short-term liabilities with its short-term assets, alongside a price-to-earnings (P/E) ratio of 26.38, reflecting solid financial positioning and growth potential [5]

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Financial Performance - Total net revenue for the three months ended September 30, 2025, was $1,335,582, representing an increase of 9.1% compared to $1,224,509 for the same period in 2024[10] - Gross profit for the same period was $820,820, up from $717,219, indicating a gross margin improvement[10] - Net income for the three months ended September 30, 2025, was $348,536, compared to $311,355 for the same period in 2024, reflecting a year-over-year increase of 11.9%[12] - Basic earnings per share increased to $2.38 for the three months ended September 30, 2025, compared to $2.12 for the same period in 2024[10] - Total revenue for the three months ended September 30, 2025, was $1.336 billion, compared to $1.225 billion in 2024, reflecting a year-over-year increase of about 9.1%[28] - Revenue from the Sleep and Breathing Health segment reached $1.169 billion, up from $1.068 billion in the prior year, indicating a growth of approximately 9.5%[28] - Net operating profit for the Sleep and Breathing Health segment was $530,624, up from $460,975, reflecting a growth of 15.0% year-over-year[52] - The Residential Care Software segment reported net operating profit of $54,018, an increase of 13.0% from $47,621 in the prior year[52] Assets and Liabilities - Total assets as of September 30, 2025, were $8,308,352, an increase from $8,174,391 as of June 30, 2025[8] - Total current liabilities increased to $1,255,502 as of September 30, 2025, compared to $1,019,120 at the end of the previous quarter, indicating a rise in short-term obligations[8] - Total liabilities decreased to $2,187.1 million from $2,206.5 million, showing a decline of about 0.9%[8] - Total stockholders' equity rose to $6,121,264 as of September 30, 2025, compared to $5,967,859 at the end of the previous quarter[8] Cash Flow and Liquidity - Cash and cash equivalents increased to $1,383,848 as of September 30, 2025, from $1,209,450 as of June 30, 2025, showing improved liquidity[8] - Cash flows from operating activities for the three months ended September 30, 2025, were $457.321 million, compared to $325.538 million in 2024, marking an increase of about 40.4%[20] - Cash provided by operating activities was $457.3 million for the three months ended September 30, 2025, compared to $325.5 million for the same period in 2024, reflecting a $131.8 million increase[160] - Cash used in investing activities was $52.6 million for the three months ended September 30, 2025, compared to cash provided of $2.1 million for the same period in 2024, indicating increased capital expenditures[161] Research and Development - Research and development expenses for the three months ended September 30, 2025, were $87,323, up from $79,524 in the same period last year, indicating a focus on innovation[10] - Research and development investment was $87.3 million, representing 6.5% of net revenues for the three months ended September 30, 2025[119] - Research and development expenses increased by $7.8 million, or 10%, to $87.3 million for the three months ended September 30, 2025, compared to $79.5 million for the same period in 2024[136] Dividends and Shareholder Returns - The company declared a dividend of $0.60 per share for the three months ended September 30, 2025, compared to $0.53 per share in the same period in 2024[10] - The company repurchased $150.0 million of treasury stock during the three months ended September 30, 2025, compared to $50.0 million during the same period in 2024[163] Legal and Regulatory Matters - ResMed Corp. filed a lawsuit seeking a declaration of non-infringement for U.S. Patent No. 11,602,284, with the case transferred to the Northern District of Ohio in November 2023[87] - Cleveland Medical's counterclaims against ResMed include allegations of infringement on five additional patents, with ongoing legal proceedings expected to continue into 2026[88] Accounting and Standards - The company is currently evaluating the impact of adopting ASU 2025-06 on its consolidated financial statements and disclosures, which will be effective in the first quarter of the fiscal year ending June 30, 2029[43] - The company is evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements, which focuses on improvements to income tax disclosures[46] Currency and Hedging - The company recognized a loss of $9.97 million on foreign currency hedging instruments for the three months ended September 30, 2025[108] - The notional value of outstanding foreign cross-currency swaps was $1,124.7 million as of September 30, 2025, maturing before December 31, 2029[98] - ResMed's foreign currency hedging program aims to manage financial impacts from exposures mainly in Euros, Australian, and Singapore dollars[99]

Core Insights - ResMed reported revenue of $1.34 billion for the quarter ended September 2025, reflecting a 9.1% increase year-over-year and a surprise of +0.94% over the Zacks Consensus Estimate of $1.32 billion [1] - Earnings per share (EPS) for the quarter was $2.55, up from $2.20 in the same quarter last year, with an EPS surprise of +2.41% compared to the consensus estimate of $2.49 [1] Revenue Performance - U.S., Canada, and Latin America - Devices revenue was $413.4 million, exceeding the average estimate of $409.2 million, representing a year-over-year increase of +7.5% [4] - U.S., Canada, and Latin America - Masks and other revenue reached $361.3 million, surpassing the average estimate of $355.76 million, with a year-over-year change of +11.9% [4] - Combined Europe, Asia, and other markets - Total revenue was $394.7 million, above the average estimate of $385.76 million, reflecting a +9.5% change year-over-year [4] - Combined Europe, Asia, and other markets - Devices revenue was $266.9 million, exceeding the average estimate of $257.17 million, with a year-over-year increase of +10.6% [4] - Combined Europe, Asia, and other markets - Masks and other revenue was $127.8 million, slightly below the average estimate of $128.59 million, showing a +7.2% year-over-year change [4] - U.S., Canada, and Latin America - Total revenue was $774.8 million, exceeding the average estimate of $764.96 million, representing a +9.5% change year-over-year [4] - Global revenue for Total Sleep and Breathing Health was $1.17 billion, surpassing the average estimate of $1.15 billion, with a +9.5% year-over-year change [4] - Global revenue for Residential Care Software was $166.1 million, below the average estimate of $170.38 million, reflecting a +5.9% year-over-year change [4] - Global revenue for Total Devices was $680.3 million, exceeding the average estimate of $666.36 million, with a year-over-year increase of +8.7% [4] - Global revenue for Total Masks and other was $489.1 million, surpassing the average estimate of $484.35 million, showing a +10.7% year-over-year change [4] Stock Performance - ResMed's shares have returned -6.4% over the past month, while the Zacks S&P 500 composite has increased by +3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - ResMed reported quarterly earnings of $2.55 per share, exceeding the Zacks Consensus Estimate of $2.49 per share, and showing an increase from $2.20 per share a year ago, resulting in an earnings surprise of +2.41% [1] - The company achieved revenues of $1.34 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.94% and up from $1.22 billion year-over-year [2] - ResMed has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.65 on revenues of $1.39 billion, and for the current fiscal year, it is $10.75 on revenues of $5.56 billion [7] - The earnings outlook will be influenced by management's commentary during the earnings call, which is crucial for assessing future stock performance [3][4] Industry Context - The Medical - Products industry, to which ResMed belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5] Stock Performance - ResMed shares have increased approximately 10.9% since the beginning of the year, while the S&P 500 has gained 17.2%, indicating underperformance relative to the broader market [3] - The current Zacks Rank for ResMed is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - ResMed reported a 9% increase in revenue for Q1 FY2026, with an 8% increase on a constant currency basis, reaching $1.34 billion [4][31] - Gross margin improved by 280 basis points year-over-year to 62%, driven by component cost improvements and manufacturing efficiencies [34] - Operating profit increased by 19%, with operating margin improving to 36.1% compared to 33.2% in the prior year [37] - Net income rose by 15%, and non-GAAP diluted earnings per share increased by 16% [38] Business Line Data and Key Metrics Changes - Device sales in the U.S., Canada, and Latin America increased by 10%, while masks and other sales grew by 12% [32] - In Europe, Asia, and other regions, device sales increased by 7%, and masks and other sales increased by 4% on a constant currency basis [33] - The Residential Care Software (RCS) business saw a 5% increase in revenue, with strong performance from the MEDIFOX DAN platform [33] Market Data and Key Metrics Changes - The U.S. market penetration for sleep apnea treatment is estimated to be between 15% to 20%, with Europe at 10% to 15%, and Asia-Pacific below 5% [60] - The prevalence of obstructive sleep apnea (OSA) is projected to rise significantly, with estimates suggesting it will affect nearly 77 million U.S. adults by 2050 [20] Company Strategy and Development Direction - ResMed is focused on expanding its mask portfolio and driving mask resupply through education and awareness initiatives [5][6] - The company is investing in digital health technologies, including AI and machine learning, to enhance patient care and adherence [14][17] - ResMed's strategy includes increasing U.S. manufacturing capacity and establishing a new distribution center in Indianapolis to improve delivery speed [12][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit growth in the masks and other category, supported by new product innovations [5][6] - The company remains committed to operating excellence and driving growth amidst global macroeconomic uncertainties [10][22] - Management highlighted the importance of ongoing investments in R&D and SG&A to support long-term growth [18][22] Other Important Information - ResMed returned over $238 million to shareholders through dividends and share repurchases during the quarter [28][39] - The company announced a quarterly dividend of $0.60 per share and plans to continue share repurchases at a rate of approximately $150 million per quarter [39] Q&A Session Summary Question: Can you highlight the unique attributes of the new mask launched in Australia and the U.S.? - The AirTouch F30i is a full-face mask with innovative fabric-based technology designed for comfort and high margins, targeting patients who breathe through both their nose and mouth [40][41] Question: Can you discuss the potential tuck-in acquisitions and their impact on the patient funnel? - ResMed has made tuck-in acquisitions to improve access to home sleep apnea testing tools, which have positively impacted growth in the U.S. device market [44][46] Question: What are the plans for U.S. manufacturing and product development? - ResMed is expanding its U.S. manufacturing capabilities to include not just motors but also masks and devices, aiming for a robust supply chain [49][51] Question: How does ResMed measure the effectiveness of demand generation initiatives? - The company employs sophisticated targeting strategies for demand generation, focusing on demographics and healthcare access to optimize patient acquisition [52][54] Question: What is the current market penetration for sleep apnea treatment in the U.S.? - The U.S. market penetration for sleep apnea treatment is estimated to be between 15% to 20%, with significant room for growth as awareness increases [60]

Financial Performance - Q1 FY26 - Revenue increased to $13356 million from $12245 million in Q1 FY25[34], representing an increase of approximately 9% - GAAP gross margin increased from 586% in Q1 FY25 to 615% in Q1 FY26[37] - Non-GAAP gross margin increased from 592% in Q1 FY25 to 620% in Q1 FY26[37] - GAAP operating income increased from $3873 million in Q1 FY25 to $4465 million in Q1 FY26[38] - Non-GAAP operating income increased from $4064 million in Q1 FY25 to $4821 million in Q1 FY26[38] - GAAP EPS increased from $211 in Q1 FY25 to $237 in Q1 FY26[40] - Non-GAAP EPS increased from $220 in Q1 FY25 to $255 in Q1 FY26[40] Business Segments & Regions - LTM 1Q26 - Devices accounted for 52% of revenue, Masks and Other for 36%, and RCS for 12%[8] - U S, Canada, & Latin America accounted for 58% of revenue, Europe, Asia, & Other for 30%, and RCS (U S & Germany) for 12%[10] Financial Strength - Free cash flow totaled approximately $18 billion for LTM Q1 FY26[50], up approximately 31% year-over-year[50] - The company has a net cash position of $715 million as of Q1 FY26[50]

Financial Performance - Revenue for the first quarter of fiscal year 2026 increased by 9% year-over-year to $1.335 billion, with an 8% increase on a constant currency basis[5] - Diluted earnings per share rose by 12% to $2.37, while non-GAAP diluted earnings per share increased by 16% to $2.55[12] - Income from operations increased by 15% to $446.5 million, with non-GAAP income from operations up 19% to $482.1 million[5] - Net income for the three months ended September 30, 2025, was $348,536,000, an increase of 12% from $311,355,000 in the same period of 2024[21] - Total revenue for the three months ended September 30, 2025, was $1,335,582,000, representing a 9% increase from $1,224,509,000 in 2024[23] - Non-GAAP diluted earnings per share increased to $2.55 in Q3 2025, compared to $2.20 in Q3 2024[25] Cash Flow and Financial Position - Operating cash flow for the quarter was $457 million, reflecting strong financial performance[12] - Total cash and cash equivalents at the end of the period increased to $1,383,848,000 from $426,361,000 at the end of the same period in 2024[21] - Cash flows from operating activities for Q3 2025 were $457,321,000, up from $325,538,000 in Q3 2024[21] - The company reported a net cash used in investing activities of $(52,578,000) for Q3 2025, compared to $2,146,000 in the same period of 2024[21] - The company’s total cash outflow from financing activities was $(230,274,000) in Q3 2025, compared to $(150,757,000) in Q3 2024[21] Market Performance - Revenue in the U.S., Canada, and Latin America grew by 10%, while revenue in Europe, Asia, and other markets increased by 6% on a constant currency basis[8] - Revenue from devices in the U.S., Canada, and Latin America was $413.4 million, an 8% increase from $384.5 million in the prior year[28] - Total revenue from masks and other products in the same region rose by 12% to $361.3 million from $322.8 million[28] Strategic Initiatives - The company declared a quarterly cash dividend of $0.60 per share, payable on December 18, 2025[10] - Resmed recorded $16 million in restructuring-related charges due to workforce planning activities aligned with its 2030 strategic priorities[8] - The company launched the Sleep Institute to promote independent research and elevate sleep health as a public health priority[12] - Resmed received dual Red Dot Product Design 2025 awards for the AirTouch N30i, highlighting its commitment to patient-centered innovation[12] Margins and Efficiency - Non-GAAP gross margin expanded by 280 basis points to 62.0%, driven by manufacturing efficiencies and component cost improvements[5] - GAAP gross margin improved to 61.5% in Q3 2025, up from 58.6% in Q3 2024[23]

Core Insights - Resmed Inc. reported a strong start to fiscal year 2026, with a 9% year-over-year revenue growth and significant improvements in gross margins and earnings per share [2][3][5] Financial Performance - Revenue for the quarter ended September 30, 2025, was $1,335.6 million, up from $1,224.5 million in the same quarter of 2024, reflecting a 9% increase [4][5][21] - Non-GAAP gross margin improved by 280 basis points to 62.0%, while GAAP gross margin increased by 290 basis points to 61.5% [5][21] - Non-GAAP diluted earnings per share rose by 16% to $2.55, compared to $2.20 in the prior year [5][19] Operational Highlights - Income from operations increased by 15% to $446.5 million, with non-GAAP income from operations rising by 19% to $482.1 million [5][19] - Operating cash flow for the quarter was $457 million, indicating strong cash generation capabilities [5][17] - The company declared a quarterly cash dividend of $0.60 per share, payable on December 18, 2025 [8] Market and Product Insights - Revenue growth was driven by increased demand for sleep devices, masks, and accessories, with U.S., Canada, and Latin America revenue growing by 10% [9][21] - The company launched the Sleep Institute to promote sleep health as a public health priority and published a study projecting a significant increase in obstructive sleep apnea cases by 2050 [9][11] Strategic Initiatives - Resmed is committed to ongoing operational excellence and strategic investments in innovation to ensure sustainable growth [4][9] - The company recorded $16 million in restructuring-related charges as part of workforce planning aligned with its 2030 strategic priorities [9]