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Resmed (RMD)
NYSE:RMD
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Resmed
(NYSE:RMD)
Rating:85Outperform
Price Target:―
Positive Factors
Financial Performance
The company experienced a 140 basis points gross margin expansion, reaching a level not seen since 2Q21, indicating strong financial performance.
Investor Confidence
Strong cash generation has allowed Resmed to extend its buyback program, increasing it to $100 million per quarter, which is a positive signal to investors.
Strategic Initiatives
Resmed is investing in US automated manufacturing to support local production, which could improve efficiency and reduce costs.
Negative Factors
Clinical Trials
The expected positive results from Apnimed's phase 3 trial create an overhang for RMD shares.
Competition
RMD is facing increasing competition from both neuromodulation devices and drugs.
Regulatory Challenges
RMD has yet to see an impact from the FDA approval of Eli Lilly's Zepbound for OSA.
Resmed (RMD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$36.38B
Dividend Yield0.83%
Average Volume (3M)1.17M
Price to Earnings (P/E)27.9
Beta (1Y)1.08
Revenue Growth9.54%
EPS Growth37.23%
CountryUS
Employees9,980
SectorHealthcare
Sector Strength44
IndustryMedical - Instruments & Supplies
Share Statistics
EPS (TTM)2.37
Shares Outstanding146,627,400
10 Day Avg. Volume1,066,979
30 Day Avg. Volume1,165,656
Financial Highlights & Ratios
PEG Ratio5.22
Price to Book (P/B)6.48
Price to Sales (P/S)0.00
P/FCF Ratio22.97
Enterprise Value/Market Cap0.98
Enterprise Value/Revenue1.86
Enterprise Value/Gross Profit12.19
Enterprise Value/Ebitda5.40
Forecast
1Y Price Target
$265.11Price Target Upside7.86% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
Resmed Business Overview & Revenue Model
Company DescriptionResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME)to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; and HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies. The company markets its products primarily to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force in approximately 140 countries. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.
How the Company Makes MoneyResMed generates revenue through the sale of its medical devices and related accessories, primarily targeting patients suffering from sleep apnea and other chronic respiratory conditions. A significant portion of its income is derived from its comprehensive range of CPAP machines and masks, which are sold to healthcare providers, distributors, and direct-to-consumer channels. Additionally, ResMed capitalizes on its digital health platform, which offers cloud-connected solutions for monitoring patients remotely, thereby generating recurring revenue through software subscriptions and data services. The company's strategic partnerships with healthcare providers and institutions further bolster its revenue streams by expanding its market reach and ensuring a steady demand for its products and services. Factors such as global aging populations and increasing awareness of sleep-related health issues also contribute significantly to ResMed's financial performance.
Resmed Key Performance Indicators (KPIs)
Any
Sleep and Breathing Health Products Revenue by Segment
Highlights revenue from different segments within sleep and breathing health products, indicating which areas drive growth and where the company might expand its market presence.
Highlights revenue from different segments within sleep and breathing health products, indicating which areas drive growth and where the company might expand its market presence.
Data provided by:
Main Street Data
Main Street DataResmed Financial Statement Overview
Summary
Resmed demonstrates strong financial performance with consistent revenue growth, high profitability margins, and robust cash flows. The balance sheet is stable with low leverage, although liabilities have increased. Overall, Resmed is well-positioned for growth and stability.Income Statement
Resmed demonstrates strong financial performance with consistent revenue growth, evidenced by a 7.18% revenue growth rate in the TTM compared to the previous year. The company maintains high profitability margins, including a gross profit margin of 58.52% and a net profit margin of 26.14% for the TTM. These figures reflect operational efficiency and effective cost management.92
Very Positive
Balance Sheet
Resmed's balance sheet is robust, featuring a low debt-to-equity ratio of 0.15 and a high equity ratio of 73.31% in the TTM. These indicators suggest financial stability and a strong equity base. The return on equity stands at 23.68%, indicating efficient use of shareholder funds. However, the company should monitor its total liabilities, which have increased over the years.85
Very Positive
Cash Flow
Resmed has a strong cash flow position, with a significant 21.84% growth in free cash flow in the TTM. The operating cash flow to net income ratio is 1.26, indicating healthy cash generation relative to net income. The free cash flow to net income ratio is also strong at 1.19, reinforcing the company's ability to generate cash from operations effectively.88
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.02B | 4.69B | 4.22B | 3.58B | 3.20B | 2.96B | Gross Profit |
| 2.94B | 2.66B | 2.36B | 2.02B | 1.84B | 1.72B | EBIT |
| 1.61B | 1.32B | 1.13B | 1.00B | 903.68M | 809.66M | EBITDA |
| 1.71B | 1.53B | 1.36B | 1.18B | 1.10B | 990.43M | Net Income Common Stockholders |
| 1.31B | 1.02B | 897.56M | 779.44M | 474.50M | 621.67M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 932.71M | 238.36M | 227.89M | 273.71M | 295.28M | 463.16M | Total Assets |
| 7.57B | 6.87B | 6.75B | 5.10B | 4.73B | 4.59B | Total Debt |
| 839.77M | 873.93M | 1.58B | 917.55M | 793.72M | 1.30B | Net Debt |
| -92.94M | 635.57M | 1.35B | 643.84M | 498.44M | 836.11M | Total Liabilities |
| 2.02B | 2.01B | 2.62B | 1.74B | 1.84B | 2.09B | Stockholders Equity |
| 5.55B | 4.86B | 4.13B | 3.36B | 2.89B | 2.50B |
| Cash Flow | Free Cash Flow | ||||
| 1.56B | 1.29B | 559.30M | 195.11M | 619.89M | 696.32M | Operating Cash Flow |
| 1.65B | 1.40B | 693.30M | 351.15M | 736.72M | 802.25M | Investing Cash Flow |
| -112.84M | -269.78M | -1.16B | -229.92M | -158.46M | -179.86M | Financing Cash Flow |
| -835.65M | -1.12B | 422.87M | -128.36M | -764.63M | -317.29M |
Resmed Technical Analysis
Positive
245.78
Price Trends
227.24
Positive
231.47
Positive
234.64
Positive
Market Momentum
6.79
Negative
60.36
Neutral
60.35
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RMD, the sentiment is Positive. The current price of 245.78 is above the 20-day moving average (MA) of 242.85, above the 50-day MA of 227.24, and above the 200-day MA of 234.64, indicating a bullish trend. The MACD of 6.79 indicates Negative momentum. The RSI at 60.36 is Neutral, neither overbought nor oversold. The STOCH value of 60.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RMD.
Resmed Risk Analysis
Resmed disclosed 35 risk factors in its most recent earnings report. Resmed reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Resmed Peers Comparison
Overall Rating
UnderperformOutperform
Sector (53)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
85 Outperform | $36.38B | 27.86 | 25.81% | 0.83% | 9.54% | 37.23% | |
68 Neutral | $16.30B | 38.38 | 5.25% | ― | 7.15% | 41.96% | |
68 Neutral | $50.63B | 33.71 | 5.97% | 2.25% | 5.84% | 15.12% | |
66 Neutral | $12.58B | 23.15 | 11.77% | ― | 1.66% | 21.95% | |
58 Neutral | $8.47B | 116.65 | -23.93% | ― | -0.12% | -713.82% | |
57 Neutral | $16.15B | 136.07 | -8.96% | 2.92% | -20.17% | -138.32% | |
53 Neutral | $5.24B | 3.07 | -43.58% | 2.80% | 16.87% | -0.11% |
* Healthcare Sector Average
Performance Comparison
RMD
Resmed
245.78
36.09
17.21%
BAX
Baxter International
30.43
-2.69
-8.12%
BDX
Becton Dickinson
173.14
-53.25
-23.52%
COO
Cooper Co
79.37
-15.07
-15.96%
HOLX
Hologic
54.82
-19.17
-25.91%
MASI
Masimo
149.39
24.64
19.75%
Resmed Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q3-2025)
| % Change Since: 14.86%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth, gross margin expansion, successful product launches, and increased share buybacks. Despite challenges such as sleep lab backlogs and foreign currency impacts, ResMed demonstrated resilience with strategic expansions and maintaining tariff exemptions.Q3-2025 Updates
Positive Updates
Strong Revenue Growth
Group revenue for Q3 FY2025 was $1.29 billion, an 8% headline increase and 9% in constant currency terms. Device sales increased by 7% globally, while masks and other sales increased by 12% in constant currency.
Gross Margin Expansion
Gross margin increased by 140 basis points to 59.9% in the March quarter, driven by manufacturing and logistics efficiencies and favorable product mix shifts.
Successful Launch of New Products
The first full commercial rollout of Nite Owl and the launch of AirSense 11 version of VPAP Tx contributed to new technology introductions to customers in Q3.
Recognition for Innovation
ResMed was named in the Lexus Nexus list of the top 100 global innovators, showcasing the company's market-leading efforts in pioneering innovation.
Strong Cash Flow and Net Income
Cash flow from operations was $579 million, and net income for the March quarter increased by 11%, with non-GAAP diluted earnings per share of $2.37, also increasing by 11%.
Expansion of Manufacturing Facilities
ResMed is opening a new advanced manufacturing facility in Calabasas, California, which will almost double its manufacturing footprint in the US.
Increased Share Buyback Program
ResMed plans to increase its ongoing share buyback program to purchase shares to the value of approximately $100 million per quarter starting in Q4 FY2025.
Tariff Exemptions Maintained
ResMed confirmed that it will continue to benefit from tariff exemptions on its products imported into the US, mitigating potential impacts from new tariffs.
Negative Updates
Ongoing Sleep Lab Backlogs
There is a significant backlog of patients in sleep labs, which has been a challenge in diagnosing and treating new patients efficiently.
Foreign Currency Impact
Year-over-year movements in foreign currencies negatively impacted revenue by approximately $13 million during the March quarter.
Company Guidance
During the Q3 Fiscal Year 2025 earnings call, ResMed reported strong financial performance, highlighting several key metrics. The company achieved a revenue of $1.29 billion, marking an 8% increase year-over-year, or 9% in constant currency terms. Gross margin expanded by 140 basis points to 59.9%, driven by manufacturing and logistics efficiencies and favorable product mix shifts. Sales in the US, Canada, and Latin America increased by 9%, while sales in Europe, Asia, and other regions grew by 8% on a constant currency basis. ResMed's SG&A expenses improved slightly as a percentage of revenue to 19%, while R&D expenses were 6.5% of revenue. The company generated strong free cash flow of $579 million, including a tax refund, and ended the quarter with a cash balance of $933 million. ResMed plans to increase its share buyback program to $100 million per quarter, reflecting confidence in its financial position despite ongoing global uncertainties.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.