Financial Trends -- 7.5/10
ResMed is a rare medtech compounder delivering exceptional margin expansion that more than
offsets moderating top-line growth. Gross margin has expanded from 55.8% to 62.3% non-GAAP over
three years, while operating margin at 36.3% is best-in-class for medtech. Non-GAAP EPS growth
has accelerated to 15-24% driven by operating leverage, despite revenue growth settling into the
high-single-digit range. FCF has inflected dramatically from $216M to $1.79B LTM. The revenue
deceleration from 18% to 10% is real (Philips recall normalization, SaaS headwinds) but masks a
re-acceleration in the most recent quarter to 11% on surging mask demand.
Weight: 25%
FQ2 26 Non-GAAP Op Margin
36.3%
Best-in-class medtech | +730 bps from FY23 trough
FQ2 26 Non-GAAP GM
62.3%
All-time high | Guided 62-63% FY26
FCF LTM
$1.79B
5.5% yield | >100% NI conversion
FQ2 26 Revenue Growth
+11.0%
Re-accelerating | Masks +16.3%
Annual Financial Summary ($M, FYE June 30)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Total Revenue | $3,197M | $3,578M | $4,223M | $4,685M | $5,146M |
| Rev YoY | — | +11.9% | +18.0% | +10.9% | +9.8% |
| Devices | $1,610M | $1,867M | $2,271M | $2,444M | $2,665M |
| Dev YoY | — | +16.0% | +21.6% | +7.6% | +9.1% |
| Masks & Other | $1,213M | $1,310M | $1,454M | $1,657M | $1,840M |
| Masks YoY | — | +8.0% | +11.0% | +13.9% | +11.0% |
| SaaS | $374M | $401M | $498M | $584M | $641M |
| SaaS YoY | — | +7.3% | +24.2% | +17.3% | +9.8% |
| GAAP Gross Profit | $1,839M | $2,024M | $2,356M | $2,655M | $3,055M |
| GAAP Gross Margin | 57.5% | 56.6% | 55.8% | 56.7% | 59.4% |
| Non-GAAP Gross Margin | 59.1% | 57.7% | 56.5% | 57.7% | 60.0% |
| GAAP Op Income | $904M | $1,000M | $1,132M | $1,320M | $1,685M |
| GAAP Op Margin | 28.3% | 27.9% | 26.8% | 28.2% | 32.7% |
| Non-GAAP Op Income | $994M | $1,073M | $1,224M | $1,478M | $1,763M |
| Non-GAAP Op Margin | 31.1% | 30.0% | 29.0% | 31.5% | 34.3% |
| GAAP Diluted EPS | $3.24 | $5.30 | $6.09 | $6.92 | $9.51 |
| GAAP EPS YoY | — | +63.6% | +14.9% | +13.6% | +37.4% |
| Non-GAAP Diluted EPS | $5.33 | $5.79 | $6.44 | $7.72 | $9.55 |
| Non-GAAP EPS YoY | — | +8.6% | +11.2% | +19.9% | +23.7% |
| FCF LTM | — | $216M | $574M | $1,302M | $1,662M |
| Diluted Shares | 146.5M | 147.0M | 147.5M | 147.6M | 147.3M |
| Buyback | — | — | — | $150M | $300M |
Note: RMD reports under U.S. GAAP in USD. Fiscal year ends June 30. Revenue in thousands
rounded to millions. Non-GAAP adjustments exclude amortization of acquired intangibles,
restructuring, and acquisition-related expenses. FCF is operating cash flow less capex on
a trailing twelve-month basis. FY2021 FCF not available in Daloopa LTM series.
Exceptional margin expansion driving earnings acceleration despite
moderating revenue growth. Non-GAAP gross margin expanded from
56.5% in FY23 to
60.0% in FY25 (+350 bps). Non-GAAP
operating income grew from
$1,224M to
$1,763M (+44% in two years). Non-GAAP
EPS surged from
$6.44 to
$9.55 (+48%). GAAP/Non-GAAP gap
has nearly closed ($9.51 vs $9.55 in FY25), a positive quality signal.
Quarterly Revenue by Segment (CQ1 2023 through CQ4 2025)
| Metric | CQ1 23 | CQ2 23 | CQ3 23 | CQ4 23 | CQ1 24 | CQ2 24 | CQ3 24 | CQ4 24 | CQ1 25 | CQ2 25 | CQ3 25 | CQ4 25 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Revenue | $1,117M | $1,122M | $1,102M | $1,163M | $1,197M | $1,223M | $1,225M | $1,282M | $1,292M | $1,348M | $1,336M | $1,423M |
| Rev YoY | — | — | — | — | +7.2% | +9.0% | +11.1% | +10.2% | +7.9% | +10.2% | +9.0% | +11.0% |
| Devices | $608M | $602M | $565M | $606M | $638M | $635M | $626M | $669M | $676M | $694M | $680M | $726M |
| Dev YoY | — | — | — | — | +5.0% | +5.4% | +10.8% | +10.4% | +6.0% | +9.3% | +8.7% | +8.5% |
| Masks & Other | $372M | $381M | $398M | $412M | $411M | $436M | $442M | $456M | $454M | $487M | $489M | $530M |
| Masks YoY | — | — | — | — | +10.4% | +14.5% | +11.0% | +10.8% | +10.6% | +11.7% | +10.7% | +16.3% |
| SaaS | $137M | $139M | $139M | $145M | $148M | $152M | $157M | $157M | $161M | $167M | $166M | $167M |
| SaaS YoY | — | — | — | — | +8.2% | +9.6% | +12.6% | +7.9% | +8.9% | +9.9% | +5.9% | +6.5% |
Revenue re-accelerated to +11.0% in the most recent quarter
(FQ2 26 / CQ4 25), driven by masks surging +16.3%. Masks revenue of
$530M was the strongest quarter in
company history, powered by AirFit F40 and VirtuOx acquisition. Devices growth remained solid
at +8.5%. SaaS decelerated to +6.5% from double-digit pace on senior living headwinds, but
management expects reacceleration to high single digits by late FY26.
Quarterly Margins and Profitability (CQ1 2023 through CQ4 2025)
| Metric | CQ1 23 | CQ2 23 | CQ3 23 | CQ4 23 | CQ1 24 | CQ2 24 | CQ3 24 | CQ4 24 | CQ1 25 | CQ2 25 | CQ3 25 | CQ4 25 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| GAAP Gross Margin | 55.3% | 55.0% | 54.4% | 55.6% | 57.9% | 58.5% | 58.6% | 58.6% | 59.3% | 60.8% | 61.5% | 61.8% |
| Non-GAAP Gross Margin | 56.1% | 55.8% | 56.0% | 56.9% | 58.5% | 59.1% | 59.2% | 59.2% | 59.9% | 61.4% | 62.0% | 62.3% |
| GAAP Op Income | $301M | $275M | $289M | $275M | $375M | $381M | $387M | $417M | $426M | $455M | $447M | $492M |
| GAAP Op Margin | 26.9% | 24.5% | 26.2% | 23.7% | 31.3% | 31.2% | 31.6% | 32.5% | 33.0% | 33.7% | 33.4% | 34.6% |
| Non-GAAP Op Income | $321M | $307M | $319M | $366M | $394M | $400M | $406M | $436M | $445M | $476M | $482M | $517M |
| Non-GAAP Op Margin | 28.7% | 27.4% | 28.9% | 31.4% | 32.9% | 32.7% | 33.2% | 34.0% | 34.4% | 35.3% | 36.1% | 36.3% |
Gross margin trajectory is exceptional -- 12 consecutive
quarters of YoY expansion. Non-GAAP gross margin expanded from
55.8% (CQ2 23) to
62.3% (CQ4 25), a +650 bps swing.
Non-GAAP operating margin at
36.3% is best-in-class for medtech.
Drivers include supply chain optimization, mix shift toward higher-margin masks, and
manufacturing efficiencies. Management guided gross margin of 62-63% for FY26.
Quarterly EPS and Free Cash Flow (CQ1 2023 through CQ4 2025)
| Metric | CQ1 23 | CQ2 23 | CQ3 23 | CQ4 23 | CQ1 24 | CQ2 24 | CQ3 24 | CQ4 24 | CQ1 25 | CQ2 25 | CQ3 25 | CQ4 25 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| GAAP Diluted EPS | $1.58 | $1.56 | $1.49 | $1.42 | $2.04 | $1.98 | $2.11 | $2.34 | $2.48 | $2.58 | $2.37 | $2.68 |
| Non-GAAP Diluted EPS | $1.68 | $1.60 | $1.64 | $1.88 | $2.13 | $2.08 | $2.20 | $2.43 | $2.37 | $2.55 | $2.55 | $2.81 |
| FCF LTM | $422M | $574M | $814M | $963M | $1,090M | $1,302M | $1,353M | $1,392M | $1,569M | $1,662M | $1,768M | $1,792M |
| Diluted Shares | 147.4M | 147.6M | 147.5M | 147.5M | 147.5M | 147.5M | 147.6M | 147.5M | 147.2M | 147.0M | 146.9M | 146.4M |
FCF has undergone a dramatic inflection -- from
$574M LTM in CQ2 23 to
$1,792M LTM in CQ4 25. FCF
conversion on net income is well above 100%. At ~$32.5B market cap, the 5.5% FCF yield is
attractive for a high-quality compounder. TTM Non-GAAP EPS of ~$10.28 puts the stock at
~21.8x trailing, reasonable for this quality profile. Share count declining modestly as
buyback pace accelerates ($325M in H1 FY26 alone vs $300M for all of FY25).
Acceleration / Deceleration Analysis
| Signal | Detail | Direction |
|---|---|---|
| Revenue Growth (Annual) | +18.0% (FY23) to +10.9% (FY24) to +9.8% (FY25) -- steady fade | Decelerating |
| Revenue Growth (Quarterly) | CQ3 25: +9.0% then CQ4 25: +11.0% -- re-accelerating on masks | Accelerating |
| Gross Margin Expansion | Non-GAAP GM from 55.8% trough to 62.3% all-time high; +650 bps in 10 Qs | Accelerating |
| GM YoY Expansion Pace | YoY GM expansion slowing: +220 bps (FQ1 26) to +100 bps (FQ2 26) | Slowing |
| Operating Margin | Non-GAAP op margin 36.3% -- new record; +530 bps from FY23 trough | Accelerating |
| Non-GAAP EPS Growth | +23.7% (FY25); FQ2 26 vs FQ2 25: +15.6%; accelerating trajectory | Accelerating |
| FCF Generation | $216M (FY22) to $1,792M LTM; >100% NI conversion; 5.5% yield | Accelerating |
| SaaS Growth | +24.2% (FY23) to +9.8% (FY25) to +5.9%/+6.5% recent Qs | Decelerating |
| Masks Growth | +16.3% in CQ4 25 -- strongest quarter in recent history | Accelerating |
| Capital Return | Buyback accelerating: $325M in H1 FY26 vs $300M all FY25; share count declining | Accelerating |
Penalty / Modifier Assessment
| Factor | Impact | Detail |
|---|---|---|
| Philips recall normalization | -0.50 | FY23 device growth of +21.6% was unsustainably high from Philips recall. Now normalizing to high-single-digits. |
| SaaS deceleration | -0.50 | SaaS segment growth fell from +17% (FY24) to +6% recently. Senior living headwinds are real. ~15% of revenue. |
| Revenue approaching single digits | -0.50 | Total revenue growth trending toward high-single-digits. Adequate but not exceptional for ~20x fwd P/E. |
| Gross margin expansion excellence | +0.50 | +650 bps Non-GAAP GM expansion to all-time high 62.3%. Supply chain wins, favorable mix, manufacturing efficiencies. |
| FCF inflection | +0.50 | FCF went from $216M to $1.8B in 4 years. Conversion >100% of net income. Best-in-class. |
| EPS growth acceleration | +0.50 | Non-GAAP EPS growing 15-24% on operating leverage, despite single-digit revenue growth. Powerful compounding. |
Final Score: 7.5 / 10. A company with moderating
top-line growth but exceptional margin expansion driving strong EPS and FCF growth. Revenue
deceleration is real (Philips recall benefit fading, SaaS headwinds) but offset by
best-in-class operating leverage. GLP-1 narrative has flipped to a tailwind. Masks remain a
durable double-digit grower. The key risk is whether margins can continue expanding from
already-elevated levels (62%+ gross, 36%+ operating) to sustain the EPS growth rate as
revenue growth settles into the high-single-digit range.
Transcript Context (FY2025 through FY2026)
GLP-1 Impact (Positive Tailwind): Tracking 1.95M+ patients in claims data.
Patients with CPAP + GLP-1 scripts are 10-11% MORE likely to start CPAP therapy and stay on
it longer. Three years of data confirm this is definitively a tailwind, not a headwind.
GLP-1 oral formulations bringing even more patients into the funnel. Big pharma DTC
advertising raises sleep apnea awareness broadly.
Philips Return Risk: Philips return to the U.S. device market remains
uncertain. Where Philips has re-entered internationally, ResMed has maintained share. The
competitive moat (ecosystem, myAir platform, mask innovation) is strong. Analysts flag this
as a frequent question, but execution data supports durable share retention.
SaaS Challenges: Senior living and long-term care verticals face headwinds.
Management is doing "portfolio management" (exiting lower-margin services businesses) and
expects reacceleration to high single-digit growth by back half of FY26.
Device Growth Outlook: PCP channel investments showing early returns.
U.S. device growth at 8-11% is running above the mid-single-digit market growth rate.
Management says they can "systematically move up 25-50-100 bps" over time.
Tariff Risk: Products treat chronic respiratory disabilities and have been
subject to "global tariff relief for decades." Management confident this will continue.
Daloopa (company_id: 549) and RMD earnings call transcripts (FY2025 through FY2026)