Financial Trends -- 9/10

High-quality medical-device compounder. Revenue holding a stable-to-modestly-accelerating ~9-11% YoY band, with the two most recent quarters at the high end (+10.9%, +10.8%) — not a decelerating profile. GAAP gross margin expanded ~290bps YoY to 62.2%; EBITDA margin up ~260bps YoY to 39.0%. FCF positive and growing on a net-cash balance sheet, share count declining, debt steadily reduced. No penalty modifiers apply. Weight: 25%

Latest Q Revenue

$1,431M

src | +10.8% YoY | Stable-to-accel

GAAP Gross Margin

62.2%

src | +290bps YoY | Expanding

FCF (LTM)

$1.75B

src | Growing | Net cash

Share Count

Declining

Buyback-driven | No dilution

Quarterly Revenue Trajectory ($M)

Quarter (CY)	24Q3	24Q4	25Q1	25Q2	25Q3	25Q4	26Q1
Net Revenue	$1,224.5M	$1,282.1M	$1,291.7M	$1,348.0M	$1,335.6M	$1,422.8M	$1,431.4M
YoY	+9.6%	+7.3%	+10.2%	+10.2%	+9.1%	+10.9%	+10.8%

Stable-to-modestly-accelerating revenue in a tight ~9-11% band. Growth has held between +7.3% and +10.9% YoY across the strip, with the two most recent quarters (+10.9%, +10.8%) at the top of the range — this is not a decelerating profile. Growth is driven by the sleep & respiratory care franchise and a steady SaaS layer, riding a structurally undersupplied sleep-apnea TAM.

Gross Margin -- YoY (latest quarter vs prior-year quarter)

Metric	CY25Q1	CY26Q1	YoY
GAAP Gross Margin	59.3%	62.2%	+290 bps
Non-GAAP Gross Margin	59.9%	62.8%	+290 bps
EBITDA Margin	36.4%	39.0%	+260 bps

Material, sustained margin expansion — measured on a same-quarter YoY basis. GAAP gross margin rose ~290bps (59.3% to 62.2%) and EBITDA margin ~260bps (36.4% to 39.0%), driven by easing component/freight costs, favorable mix toward higher-margin masks/resupply and SaaS, and operating leverage. Management has committed to double-digit-bps GM improvement every year through 2030.

Annual Financial Summary (FY ends June 30)

Metric	FY2021	FY2022	FY2023	FY2024	FY2025
Net Revenue ($K)	3,196,825	3,578,127	4,222,993	4,685,297	5,146,327
Rev YoY	—	+11.9%	+18.0%	+10.9%	+9.8%
Non-GAAP Net Income ($K)	780,621	850,771	949,757	1,139,294	1,406,777
GAAP Gross Margin	57.5%	56.6%	55.8%	56.7%	59.4%
EBITDA ($K)	1,060,436	1,159,895	1,297,027	1,496,763	1,883,836
GAAP Diluted Shares ($K)	146,451	147,043	147,455	147,550	147,340
Total Debt ($K)	655,351	775,241	1,441,136	707,213	668,292

Key trends

Revenue compounding at ~13% CAGR: From $3.20B (FY2021) to $5.15B (FY2025), now holding a stable-to-accelerating +10.8% YoY in the latest quarter on a structurally undersupplied sleep-apnea TAM
Gross margin recovered off the FY2023 trough: GAAP GM fell to 55.8% (FY2023) on component/freight costs, then rose to 59.4% (FY2025) and 62.2% in the latest quarter (+290bps YoY)
EBITDA up ~78% over four years: $1.06B (FY2021) to $1.88B (FY2025), growing every fiscal year
Share count flat-to-declining: Diluted shares 146.5M (FY2021) to 147.3M (FY2025); on a quarterly basis now declining (147.5M to 145.7M) as the buyback resumed, no dilution
De-levered post-FY2023: Total debt reduced from a $1.44B peak (FY2023) to $664M, now a net-cash balance sheet

Free Cash Flow (FY, $M)

Metric	FY2021	FY2022	FY2023	FY2024	FY2025
Free Cash Flow ($M)	$634.0M	$216.3M	$573.6M	$1,301.8M	$1,661.7M
FCF YoY	—	-66%	+165%	+127%	+28%

FCF positive and growing after the FY2022 inventory-build trough. Annual FCF recovered from a working-capital-driven $216M low (FY2022) to $1.66B (FY2025), and LTM FCF has climbed to ~$1.75B. FCF margin runs ~30%+. The slight recent LTM dip reflects timing of working-capital/tax payments, not deterioration.

Share Count & Balance Sheet

Metric (CY qtr)	24Q4	25Q2	25Q4	26Q1
GAAP Diluted Shares ($K)	147,481	147,037	146,372	145,723
Total Debt ($K)	672,765	668,292	663,829	664,096

Share count declining, buyback-driven: Diluted shares fell from 147.5M (CY24Q4) to 145.7M (CY26Q1); buyback stepped up from ~$75M/qtr (FY2025) to $150M+/qtr / above $600M for FY2026, with the dividend raised 13%
Net cash: Total debt held steady at ~$664M against a net-cash position (net debt/EBITDA ~ -0.37x), so debt is not outgrowing revenue -- no penalty applies

Penalty Modifier Check

Modifier	Finding	Penalty
Negative FCF	FCF positive and growing (~$1.75B LTM); FCF margin ~30%+	None
Share Dilution	Share count declining (147.5M to 145.7M), buyback-driven	None
Profit Not Tracking Revenue	EBITDA/operating income rising alongside revenue; margins expanding	None
Debt Outgrowing Revenue	Debt declining ($1.44B peak to $664M); net-cash balance sheet	None

Score Rationale

Score of 9/10 reflects a high-quality, high-margin medical-device compounder. No penalty modifiers apply.

Supports 9/10:

Revenue holding a stable-to-modestly-accelerating ~9-11% YoY band, with the two most recent quarters (+10.9%, +10.8%) at the top of the range
GAAP gross margin expanding ~290bps YoY (59.3% to 62.2%) and EBITDA margin ~260bps YoY (36.4% to 39.0%), off an FY2023 trough
EBITDA grew every fiscal year ($1.06B to $1.88B), non-GAAP net income compounding
FCF positive and growing (~$1.75B LTM), FCF margin ~30%+, on a net-cash balance sheet
Share count declining, buyback stepped up, dividend raised 13%, no dilution
Debt steadily reduced from a $1.44B peak to $664M

Why not a 10:

Revenue growth is best characterized as "stable-to-modestly-accelerating" rather than cleanly accelerating each quarter
The most recent LTM FCF print ticked down modestly on working-capital/tax timing

Data sourced from Daloopa (company_id: 549). Fiscal year ends June 30. RMD fiscal quarter = calendar quarter +2 (CY26Q1 = fiscal Q3 FY2026). All financials in USD.