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ResMed's Stock Rises on Q1 Earnings and Revenue Beat, Margins Expand
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ResMed Inc.’s (RMD - Free Report) adjusted earnings per share (EPS) in the first quarter of fiscal 2025 were $2.20, up 34.1% year over year. The metric beat the Zacks Consensus Estimate by 8.4%.
The adjustments include certain non-recurring expenses/benefits like the amortization of acquired intangibles, along with the income tax effect on those adjustments.
GAAP EPS in the reported quarter was $2.11, up 41.6% from the year-ago level.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the announcement, shares of RMD jumped 6.1% in the after-hours trading yesterday.
RMD’s Q1 Revenues
On a reported basis, fiscal first-quarter revenues increased 11.1% year over year (up 11% at the constant exchange rate or CER) to $1.22 billion. The figure topped the Zacks Consensus Estimate by 2.9%.
A Closer View of ResMed’s Q1 Sales
ResMed operated through two reporting units, namely Sleep and Respiratory Care and Software as a Service (SaaS).
In alignment with the 2030 Strategy announced during Investor Day in September 2024, these reporting units have been renamed to Sleep and Breathing Health (formerly Sleep and Respiratory Care) and Residential Care Software (formerly SaaS). The methodology for attributing financial results to these reporting units remains unchanged. ResMed noted that revenues from prior periods are consistent and comparable to the previous report.
Sleep and Breathing Health
Total revenues improved 11% (same at CER) from the prior-year period to $1.07 billion. This topped our model’s projection of $998.5 million.
Within this business, revenues from global Devices were $625.8 million, up 11% (up 10% at CER), and Masks and other global revenues were $442 million, up 11% (same at CER). Both the increases are in comparison to the first quarter of fiscal 2024. Our model forecasted $584.2 million in Devices, and $414.3 million in Masks and others.
On a geographic basis, the segment’s revenues in the combined Europe, Asia and other markets rose 11% (up 10% at CER) to $360.4 million. Our model had anticipated $329.6 million.
In the U.S., Canada and Latin America, revenues were $707.3 million, up 11% year over year. Our model’s projected revenues were $849 million.
Residential Care Software
Revenues in this segment grew 13% year over year to $156.8 million, which fell short of our model’s projection of $180.2 million.
ResMed’s Margin Performance
The adjusted gross profit in the quarter under review rose 17.5% to $724.9 million despite a 2.9% uptick in the adjusted cost of sales (excluding the amortization of acquired intangibles, masks with magnet field safety notification expenses and Astral field safety notification expenses).
The adjusted gross margin for the fiscal first quarter was 59.2%, reflecting an expansion of 324 basis points (bps).
Selling, general and administration expenses rose 7.2% year over year to $238.9 million. Research and development expenses increased 5% to $79.5 million. The adjusted operating income was $406.4 million in the quarter under discussion, up 27.7% from the year-ago quarter. The adjusted operating margin expanded 431 bps year over year to 33.2%.
RMD’s Financial Updates
ResMed exited the first quarter of fiscal 2025 with cash and cash equivalents of $426.4 million compared with $238.4 million at the end of fiscal 2024 fourth quarter.
Total debt (short-and-long term) was $677.5 million compared with $706.2 million at the end of the fiscal 2024 fourth quarter.
The cumulative net cash provided by operating activities at the end of the fiscal first quarter was $325.5 million compared with $286.3 million in the year-ago period.
The company paid out $78 million in dividends in the fiscal first quarter and also repurchased 222,000 shares for consideration of $50 million as part of its ongoing capital management.
Our Take on RMD Stock
ResMed ended the first quarter of fiscal 2025 with both earnings and revenue beat. The company achieved robust revenue growth across all product and geographic categories. Masks and accessories growth was boosted by new patient activations as well as the ongoing ReSupply programs. Global device sales were driven by strong market performance from both the AirSense 10 and the AirSense 11 platforms. A strong focus on operational excellence drove the expansion in both margins, which is highly encouraging.
ResMed had some notable strides in the fiscal first quarter, such as announcing the upcoming launch of its first fabric mask, the AirTouch N30i and the introduction of several new patient-centric products encompassing digital and personalized solutions to enhance the therapy journey for sleep apnea patients. Additionally, the company unveiled its 2030 strategy to drive growth, profitability and shareholder returns, backed by its plans to accelerate product and technology innovation, operational excellence, commercial execution and financial strength. All these developments bode well for the stock.
RMD’s Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Quest Diagnostics (DGX - Free Report) , Intuitive Surgical (ISRG - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%. DGX carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DGX’s 2024 earnings are expected to surge 2.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Intuitive Surgical, carrying a Zacks Rank #2, posted a third-quarter 2024 EPS of $1.84, topping the Zacks Consensus Estimate by 11.5%. Revenues of $2.04 billion surpassed the Zacks Consensus Estimate by 1.2%.
ISRG has an estimated 2024 earnings growth rate of 20.1% compared with the industry’s 13.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.9%.
Boston Scientific Corporation, carrying a Zacks Rank #2, reported third-quarter 2024 adjusted earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion topped the Zacks Consensus Estimate by 4.5%.
BSX has an estimated 2024 earnings growth rate of 17.6% compared with the industry’s 11.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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ResMed's Stock Rises on Q1 Earnings and Revenue Beat, Margins Expand
ResMed Inc.’s (RMD - Free Report) adjusted earnings per share (EPS) in the first quarter of fiscal 2025 were $2.20, up 34.1% year over year. The metric beat the Zacks Consensus Estimate by 8.4%.
The adjustments include certain non-recurring expenses/benefits like the amortization of acquired intangibles, along with the income tax effect on those adjustments.
GAAP EPS in the reported quarter was $2.11, up 41.6% from the year-ago level.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the announcement, shares of RMD jumped 6.1% in the after-hours trading yesterday.
RMD’s Q1 Revenues
On a reported basis, fiscal first-quarter revenues increased 11.1% year over year (up 11% at the constant exchange rate or CER) to $1.22 billion. The figure topped the Zacks Consensus Estimate by 2.9%.
A Closer View of ResMed’s Q1 Sales
ResMed operated through two reporting units, namely Sleep and Respiratory Care and Software as a Service (SaaS).
In alignment with the 2030 Strategy announced during Investor Day in September 2024, these reporting units have been renamed to Sleep and Breathing Health (formerly Sleep and Respiratory Care) and Residential Care Software (formerly SaaS). The methodology for attributing financial results to these reporting units remains unchanged. ResMed noted that revenues from prior periods are consistent and comparable to the previous report.
Sleep and Breathing Health
Total revenues improved 11% (same at CER) from the prior-year period to $1.07 billion. This topped our model’s projection of $998.5 million.
Within this business, revenues from global Devices were $625.8 million, up 11% (up 10% at CER), and Masks and other global revenues were $442 million, up 11% (same at CER). Both the increases are in comparison to the first quarter of fiscal 2024. Our model forecasted $584.2 million in Devices, and $414.3 million in Masks and others.
ResMed Inc. Price, Consensus and EPS Surprise
ResMed Inc. price-consensus-eps-surprise-chart | ResMed Inc. Quote
On a geographic basis, the segment’s revenues in the combined Europe, Asia and other markets rose 11% (up 10% at CER) to $360.4 million. Our model had anticipated $329.6 million.
In the U.S., Canada and Latin America, revenues were $707.3 million, up 11% year over year. Our model’s projected revenues were $849 million.
Residential Care Software
Revenues in this segment grew 13% year over year to $156.8 million, which fell short of our model’s projection of $180.2 million.
ResMed’s Margin Performance
The adjusted gross profit in the quarter under review rose 17.5% to $724.9 million despite a 2.9% uptick in the adjusted cost of sales (excluding the amortization of acquired intangibles, masks with magnet field safety notification expenses and Astral field safety notification expenses).
The adjusted gross margin for the fiscal first quarter was 59.2%, reflecting an expansion of 324 basis points (bps).
Selling, general and administration expenses rose 7.2% year over year to $238.9 million. Research and development expenses increased 5% to $79.5 million. The adjusted operating income was $406.4 million in the quarter under discussion, up 27.7% from the year-ago quarter. The adjusted operating margin expanded 431 bps year over year to 33.2%.
RMD’s Financial Updates
ResMed exited the first quarter of fiscal 2025 with cash and cash equivalents of $426.4 million compared with $238.4 million at the end of fiscal 2024 fourth quarter.
Total debt (short-and-long term) was $677.5 million compared with $706.2 million at the end of the fiscal 2024 fourth quarter.
The cumulative net cash provided by operating activities at the end of the fiscal first quarter was $325.5 million compared with $286.3 million in the year-ago period.
The company paid out $78 million in dividends in the fiscal first quarter and also repurchased 222,000 shares for consideration of $50 million as part of its ongoing capital management.
Our Take on RMD Stock
ResMed ended the first quarter of fiscal 2025 with both earnings and revenue beat. The company achieved robust revenue growth across all product and geographic categories. Masks and accessories growth was boosted by new patient activations as well as the ongoing ReSupply programs. Global device sales were driven by strong market performance from both the AirSense 10 and the AirSense 11 platforms. A strong focus on operational excellence drove the expansion in both margins, which is highly encouraging.
ResMed had some notable strides in the fiscal first quarter, such as announcing the upcoming launch of its first fabric mask, the AirTouch N30i and the introduction of several new patient-centric products encompassing digital and personalized solutions to enhance the therapy journey for sleep apnea patients. Additionally, the company unveiled its 2030 strategy to drive growth, profitability and shareholder returns, backed by its plans to accelerate product and technology innovation, operational excellence, commercial execution and financial strength. All these developments bode well for the stock.
RMD’s Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Quest Diagnostics (DGX - Free Report) , Intuitive Surgical (ISRG - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%. DGX carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DGX’s 2024 earnings are expected to surge 2.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Intuitive Surgical, carrying a Zacks Rank #2, posted a third-quarter 2024 EPS of $1.84, topping the Zacks Consensus Estimate by 11.5%. Revenues of $2.04 billion surpassed the Zacks Consensus Estimate by 1.2%.
ISRG has an estimated 2024 earnings growth rate of 20.1% compared with the industry’s 13.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.9%.
Boston Scientific Corporation, carrying a Zacks Rank #2, reported third-quarter 2024 adjusted earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion topped the Zacks Consensus Estimate by 4.5%.
BSX has an estimated 2024 earnings growth rate of 17.6% compared with the industry’s 11.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.