ResMed(RMD) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - ResMed reported an 11% headline revenue growth for Q2 FY2026, with a 9% increase on a constant currency basis, achieving GAAP EPS growth of 16% [7][8][55] - Gross margin increased by 110 basis points year-over-year to 62.3%, driven by component cost improvements and manufacturing efficiencies [58] - Operating profits rose by 19%, with operating margin improving to 36.3% compared to 34% in the prior year [63] Business Line Data and Key Metrics Changes - Global devices revenue grew by high single digits, while masks, accessories, and other revenue saw double-digit growth [9][55] - Residential care software revenue increased by 5% on a constant currency basis, supported by strong performance from the Medifox Dan software vertical [57] Market Data and Key Metrics Changes - In the U.S., Canada, and Latin America, sales increased by 11%, with a 6% increase on a constant currency basis [55] - In Europe, Asia, and other regions, device sales increased by 5% on a constant currency basis, while masks and other sales increased by 8% [56] Company Strategy and Development Direction - ResMed aims to expand its digital health ecosystem, focusing on sleep health and breathing health, while maintaining a strong balance sheet and free cash flow for investments and shareholder returns [14][39] - The company is investing in R&D for next-generation products and enhancing its manufacturing capabilities, including a new distribution center in Indiana [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve sustainable high single-digit growth in the residential care software business by FY2027 [11] - The management highlighted the positive impact of GLP-1 medications on patient engagement and adherence to CPAP therapy, indicating a potential tailwind for future growth [78][104] Other Important Information - ResMed returned $263 million to shareholders through dividends and share repurchases during the quarter, with plans to increase share repurchases to over $600 million for FY2026 [67][68] - The company is actively monitoring the global trade environment and regulatory landscape, with no inclusion of CPAP products in CMS's competitive bidding program [37] Q&A Session Summary Question: Strong US mask number - Management noted that the strong growth in masks includes contributions from the Virtuox acquisition, but even without it, there was still double-digit growth in masks and accessories [70][72] Question: Update on GLP-1 landscape - Management confirmed that patients on GLP-1 therapy show a higher motivation to start and adhere to CPAP therapy, with a 10%-11% higher start rate observed [78][80] Question: SG&A growth ahead of revenue growth - Management indicated that the SG&A growth was influenced by the Virtuox acquisition and marketing programs, but underlying growth was tracking closely with revenue [87] Question: Impact of GLP-1 on patient funnel - Management highlighted that GLP-1 medications are bringing more motivated patients into the healthcare system, leading to higher adherence rates for CPAP therapy [80][104] Question: Philips' potential return to the U.S. market - Management stated uncertainty regarding Philips' re-entry into the U.S. market but noted that ResMed is performing well in competing against them in other regions [114][116]