Q4 FY2025 Earnings July 31, 2025 Presentation of financial information & forward-looking statements Historical financial and operating data in this presentation reflect the consolidated results of ResMed Inc., its subsidiaries, and its legal entities for the periods indicated. This presentation includes financial information prepared in accordance with accounting principles generally accepted in the United States, or GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial m ...

Core Insights - ResMed Inc. (RMD) experienced growth in Q3 of fiscal 2025, primarily driven by strong performance in its Mask business and advancements in digital health technology, despite facing challenges from a tough macroeconomic environment and intense competition [1][8]. Financial Performance - ResMed has a market capitalization of $36.00 billion and an earnings yield of 3.9%, significantly higher than the industry's 0.5% [2]. - The company has consistently exceeded earnings estimates over the past four quarters, achieving an average surprise of 4.23% [2]. - The Zacks Consensus Estimate for fiscal 2025 earnings has increased by 0.3% to $9.48 per share, with revenue estimates at $5.12 billion, reflecting a 9.3% year-over-year increase [10]. Business Segments - **Mask Sales**: The demand for ResMed's mask portfolio remains strong, benefiting from a competitor's recall. The company has introduced a comprehensive range of masks, including AirFit and AirTouch, to enhance patient adherence through advanced software solutions like AirView [3][5]. - **Product Launches**: The AirFit F40 mask is performing well in the U.S. market, with plans for global expansion. The recent launch of the AirTouch N30i has received positive early feedback [4]. Growth Drivers - ResMed is advancing its digital health technology initiatives, focusing on cloud-based software products like AirView and myAir, which enhance the connected healthcare ecosystem [6]. - The company is investing in AI-driven capabilities to improve patient therapy adherence and outcomes, with positive early testing feedback for its AI products [7]. Challenges - **Macroeconomic Factors**: Global economic conditions, including issues stemming from the Middle East conflict, currency fluctuations, and inflationary pressures, pose risks to ResMed's growth and profitability. SG&A expenses rose by 6.7% year-over-year, while R&D expenses increased by 8.9% [8]. - **Competitive Landscape**: The market for sleep-disordered breathing products is highly competitive, with challenges arising from consolidation in the healthcare industry and competition from affiliates of ResMed's customers [9].

Financial Data and Key Metrics Changes - Group revenue for Q3 FY2025 was $1.29 billion, representing an 8% increase year-over-year and a 9% increase in constant currency terms [44] - Gross margin increased by 140 basis points to 59.9%, driven by manufacturing and logistics efficiencies, as well as favorable shifts in product mix [48][49] - Net income for the March quarter increased by 11%, with non-GAAP diluted earnings per share also increasing by 11% to $2.37 [54] Business Line Data and Key Metrics Changes - Device sales globally increased by 7%, while masks and other sales increased by 12% on a constant currency basis [46] - In the US, Canada, and Latin America, device sales increased by 6%, and masks and other sales increased by 13% [47] - Residential care software revenue increased by 10% on a constant currency basis, supported by strong performance from the Medifox DAN software vertical [47] Market Data and Key Metrics Changes - Sales in Europe, Asia, and other regions increased by 8% on a constant currency basis [45] - The company is closely monitoring the evolving global trade environment, particularly in the area of tariffs, but does not expect significant impacts due to existing tariff exemptions [11][55] Company Strategy and Development Direction - The company is focused on expanding its digital health ecosystem and enhancing its brand awareness to capture a larger share of the sleep health market [27][29] - A new manufacturing facility in Calabasas, California, is set to open in June 2025, which will double the manufacturing footprint in the US and increase production capacity [57] - The company aims to improve the lives of 500 million people by 2030, emphasizing its commitment to innovation and patient care [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to thrive amid global uncertainties, citing a strong balance sheet and operational efficiency [13][60] - The company is actively tracking metrics related to patient flow and treatment adherence, aiming to reduce wait times for diagnostics and therapy [81][82] - Management highlighted the importance of ongoing investments in R&D, which are expected to drive long-term growth [18][52] Other Important Information - The company plans to increase its share buyback program to approximately $100 million per quarter starting in Q4 FY2025 [60] - Cash flow from operations for the quarter was $579 million, including a tax refund of $107 million [58] Q&A Session Summary Question: Can you talk us through the factors that attributed to the gross margin expansion? - Management indicated that manufacturing and distribution efficiencies were the primary drivers, along with favorable product mix and component costs [67][68] Question: How are you tracking the investments related to sleep apnea diagnostics? - Management is tracking metrics such as time to titration and therapy onset, emphasizing the importance of reducing backlogs in sleep labs [81][82] Question: Can you provide an update on the GLP-1 medications and their impact on new patient funnels for CPAP? - Management noted that while GLP-1s are being rolled out, they are proactively educating primary care physicians to drive referrals for sleep apnea therapy [103][106] Question: What is the expected impact of US tariffs on your financial results? - Management confirmed that existing tariff exemptions apply to their products, and they do not expect significant financial impacts from new tariffs [55][132] Question: Can you elaborate on the increase in share buybacks and capital allocation? - Management expressed confidence in increasing share buybacks due to strong operating cash flows and a robust business model, while also considering M&A opportunities [92][96]