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RESMED INC (RMD)·Q4 2025 Earnings Summary

Executive Summary

  • Delivered a strong print: revenue $1.35B (+10% YoY) and GAAP diluted EPS $2.58; non-GAAP EPS $2.55, with gross margin up 230 bps YoY to 60.8% (non-GAAP 61.4%). Sequential margin improved ~150 bps; management guided FY26 gross margin to 61–63% .
  • Beat Wall Street: Q4 revenue $1.35B vs $1.33B consensus* and GAAP EPS $2.58 vs $2.48 consensus*; 13 EPS estimates and 17 revenue estimates underpin the consensus* (bold beat) *.
  • Capital returns inflected: quarterly dividend raised 13% to $0.60 and buyback program increased to ~$150M per quarter starting Q1 FY26, ~1.5% share count reduction at current price; Q4 repurchased 419k shares for $100M .
  • Operating leverage continues: non-GAAP operating margin ~35% with efficiencies in procurement, manufacturing, logistics; FX aided roughly half of the sequential GM improvement; FY26 SG&A guided to 19–20% of revenue and R&D to 6–7% .
  • Strategic narrative: demand generation via GLP-1 and wearables plus diagnostics (VirtuOx, NightOwl) to unclog the funnel; CMS competitive bidding seen as benign; tariff exemptions reaffirmed; opening new Calabasas manufacturing capacity .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion: GAAP GM up 230 bps YoY to 60.8% and non-GAAP GM to 61.4%, driven by procurement, manufacturing and logistics efficiencies plus FX; sequential GM +150 bps (bold improvement) .
  • Broad-based growth: Devices +9% globally (cc +8%) and Masks +12% (cc +11%); U.S./Canada/LatAm +9% ex-RCS; Europe/Asia/ROW +13% (cc +9%); RCS +10% .
  • Cash generation and returns: Q4 operating cash flow $539M; dividend lifted to $0.60; accelerated repurchases to ~$150M/quarter starting FY26 (strategic confidence) .
  • Management quote: “We delivered 10% headline revenue growth, 230 basis points in non-GAAP gross margin expansion, and 23% non-GAAP EPS growth” .

What Went Wrong

  • Effective tax rate uptick: Non-GAAP ETR in Q4 was 21.9% vs 18.7% prior-year; FY26 ETR guided up to 21–23% due to new legislation .
  • FX sensitivity: Nearly half of sequential GM improvement came from currency; FX remains a swing factor despite structural cost progress .
  • RCS leadership transition: Departure of the RCS Chief Commercial Officer amid integration to the broader organization introduces execution risk (though segment continues to be reported separately) .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$1.282 $1.292 $1.348
GAAP Diluted EPS ($)$2.34 $2.48 $2.58
Non-GAAP Diluted EPS ($)$2.43 $2.37 $2.55
GAAP Gross Margin (%)58.6% 59.3% 60.8%
Non-GAAP Gross Margin (%)59.2% 59.9% 61.4%
Income from Operations ($USD Millions)$417.2 $426.3 $454.5
Operating Cash Flow ($USD Millions)$309 $579 $539
Q4 2025 Actual vs ConsensusQ4 2025
Revenue ($USD Billions)$1.348 vs $1.331* (bold beat) *
Primary EPS ($)$2.58 vs $2.48* (bold beat) *
EPS Estimates Count13*
Revenue Estimates Count17*

Note: Values retrieved from S&P Global for consensus figures (*).

Segment breakdown (Revenue, $USD Millions):

SegmentQ3 2025Q4 2025
U.S., Canada & LatAm Devices$422.7 $432.8
U.S., Canada & LatAm Masks & Other$326.7 $359.2
Total U.S., Canada & LatAm$749.3 $791.9
Europe/Asia/ROW Devices$253.5 $261.1
Europe/Asia/ROW Masks & Other$127.7 $127.9
Total Europe/Asia/ROW$381.3 $389.0
Total Devices (Global)$676.2 $693.9
Total Masks & Other (Global)$454.4 $487.1
Sleep & Breathing Health (Global)$1,130.6 $1,181.0
Residential Care Software (RCS)$161.2 $167.0
Total Revenue$1,291.7 $1,348.0

KPIs and Balance Sheet Highlights:

KPIQ3 2025Q4 2025
Operating Cash Flow ($USD Millions)$579 $539
Capex ($USD Millions)$21 $31
Dividend per Share ($)$0.53 $0.60
Shares Repurchased (000s)314 419
Buyback Spend ($USD Millions)$75 $100
Cash Balance ($USD Millions)$933 $1,209
Gross Debt ($USD Millions)$675 $668
Net Cash ($USD Millions)$258 $541

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin (%)FY26N/A61–63% New
SG&A as % of RevenueFY26N/A19–20% New
R&D as % of RevenueFY26N/A6–7% New
Effective Tax RateFY26N/A21–23% New
Dividend per ShareOngoing$0.53 (Q3 FY25) $0.60 (Q4 FY25) Raised
Share RepurchasesFY25/Q4 onward~$100M/quarter starting Q4 FY25 ~$150M/quarter starting Q1 FY26 Raised
Q4 FY25 Gross MarginQ4 FY25“Broadly consistent with Q3” Delivered non-GAAP 61.4% (GAAP 60.8%) In line to better

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
AI/GenAI & Digital InitiativesDawn digital assistant; myAir integration; Samsung/Apple wearable synergies; ML-driven coaching Continued AI rollout; Dawn wider rollout; smart coaching; attrition predictor in Brightree Scaling Dawn across regions in FY26; broader AI in R&D/testing; proactive health companion vision Accelerating
Supply Chain & Gross MarginGM 59.2%; efficiencies and component cost improvements GM 59.9%; drivers: manufacturing/distribution, product mix; guidance “broadly consistent” GM 61.4% non-GAAP; FX ~half of sequential improvement; FY26 GM 61–63% Improving
Tariffs/MacroIndustry advocacy; med-tech carve-outs; manufacturing in AUS/SG/US CBP reaffirmation of negligible duties; Calabasas opening Tariff exemptions reaffirmed; competitive bidding seen benign; CEO role in AdvaMed Stable/benign
Product Performance (Devices/Masks)AirSense 11 launches; AirTouch N30i fabric interface; strong masks growth Devices mid-single digit market, masks high-single digit; resupply programs U.S. masks low double-digit growth; share gains from AirTouch N30i and AirFit F40 Strong
Regional TrendsUS devices +12%, OUS +8% (cc) US & ROW devices/masks growth; GM FX headwinds ROW devices +10% (cc), strong Europe/China; US masks +12% Improving
Regulatory/LegalGLP-1 coverage dynamics; AASM guidance; CMS competitive bidding commentary Q3: benign impact expected; med-tech tariff relief CMS competitive bidding: prior experience suggests modest impact; patient access advocacy Manageable
Diagnostics/AdjacenciesNightOwl HSAT launch; VPAP Tx for labs Build concierge funnel; CME for PCPs VirtuOx acquisition; portfolio view with Somnaware/Ectosense to scale HSAT Expanding

Management Commentary

  • “We delivered 10% headline revenue growth, 230 basis points in non-GAAP gross margin expansion, and 23% non-GAAP EPS growth.”
  • “Our fiscal year 2025 free cash flow was $1.7 billion… flexibility to both invest in our business and return capital to our shareholders.”
  • “Looking forward… we expect gross margin will be in the range of 61% to 63% in fiscal year 2026.”
  • “We plan to… purchase shares to the value of approximately $150 million per quarter commencing in Q1 of fiscal year 2026.”
  • “We’re really excited about VirtuOx… part of a long-term play… to scale home sleep apnea testing and free up lab capacity for complex cases.”

Q&A Highlights

  • ROW devices growth: strong quarter; factors include tenders and market-specific dynamics; China improved; outlook mid-single-digit devices growth across geographies .
  • Gross margin drivers: component cost improvements, logistics (sea-to-air freight ratio near pre-COVID), platform transition (AS10→AS11), FX half of sequential improvement; FY26 GM expected to improve across the year .
  • Masks outperformance: share gains from AirTouch N30i and AirFit F40; enhanced resupply via Brightree/myAir; U.S. masks +12% .
  • Competitive bidding: prior rounds proved benign; Medicare vs private pay aligned; expect modest impact; continued advocacy for patient access .
  • GLP-1 and adherence: GLP-1-prescribed patients start PAP ~11% more; higher resupply at 1–2 years; combination therapy favored; demand-gen via CME to high-volume PCPs .

Estimates Context

  • Q4 2025 actuals vs consensus: Revenue $1.348B vs $1.331B*; GAAP EPS $2.58 vs $2.48*; # of estimates: EPS 13*, Revenue 17* (bold beats) *.
  • Implications: Consensus likely to drift higher for FY26 on GM trajectory (61–63% guided) and capital returns; tax-rate guidance (21–23%) may temper net EPS gains from margin expansion .

Note: Values retrieved from S&P Global (*).

Key Takeaways for Investors

  • Margin story accelerating: Structural cost actions plus FX tailwinds lifted GM; FY26 GM guide 61–63% supports multi-quarter EPS revision potential (bold positive) .
  • Capital return catalyst: Dividend raised to $0.60 and buybacks stepping up to ~$150M/quarter in FY26 (~1.5% share count), reinforcing confidence and potential support for the stock .
  • Funnel expansion strategy: VirtuOx/NightOwl/VPAP Tx plus CME to PCPs target faster diagnosis and setup; expect durable demand generation from GLP-1s and wearables over 1–5 years .
  • Benign externalities: Tariff exemptions reaffirmed; CMS competitive bidding likely modest; manufacturing expansion in Calabasas reduces supply chain risk .
  • Masks share gains: Innovative interfaces (AirTouch N30i, AirFit F40) and resupply programs underpin above-market growth—key driver for near-term revenue/mix .
  • Watch FX and tax: FX contributed meaningfully to sequential GM; FY26 tax-rate increase (21–23%) is a headwind to net EPS leverage .
  • Near-term trading: Focus on FY26 GM cadence (starting lower, exiting higher), RCS integration milestones, and evidence of HSAT throughput improvements; any incremental clarity on CMS could be a volatility event .