01—Abstract
Summary
Summary of the 10-Q filed April 24, 2025. Cited figures are marked; the original filing is the authoritative source.
ResMed Inc. reported net revenue of $1,291.7 milliona for the three months ended March 31, 2025, up from $1,197.0 million a year earlier, an increase of $94.8 million or 8% (9% on a constant currency basis).
Growth came from both segments: Sleep and Breathing Health revenue rose to $1,130.6 millionb, and Residential Care Software revenue rose to $161.2 million. Gross margin improved to 59.3% from 57.9%, and income from operations increased to $426.3 million from $374.6 million. Net income for the quarter was $365.0 million, up 21%, and diluted earnings per share were $2.48 versus $2.04.
For the nine months, net revenue was $3,798.3 millionc, net income was $1,021.0 million (up 40%), and diluted EPS was $6.93 versus $4.94. Cash flow and balance sheet strength improved over the period. Cash and cash equivalents rose to $932.7 million from $238.4 million at June 30, 2024, and net cash provided by operating activities was $1,212.8 million for the nine months, compared with $961.1 million a year earlier.
The company repurchased $200.0 milliond of treasury stock and paid $233.3 million in dividends during the nine months. Total debt outstanding was $675.0 million, and $1,500.0 million remained available under the revolving credit facility. The company declared a quarterly dividend of $0.53 per share on April 23, 2025.
The filing also flags risks. Management cites uncertainty from U.S. healthcare policy changes, FDA oversight disruptions, and newly announced tariffs on imports from Canada, Mexico, and China.
The company is also party to patent litigation with New York University and Cleveland Medical, though it states it cannot estimate potential losses from matters still open. Non-GAAP diluted EPS for the quarter was $2.37, compared with $2.13 a year earlier, and the quarter's GAAP results included a $30.0 million income tax benefit from interest and penalties on IRS refunds.
02—Key points
Key Highlights
- Q3 FY2025 net revenue rose 8% to $1,291.7 million (9% in constant currency), led by Sleep and Breathing Health at $1,130.6 million and Residential Care Software at $161.2 million.
- Gross margin expanded to 59.3% from 57.9% in the quarter, driven by manufacturing and logistics efficiencies, component cost improvements, and favorable product mix, partially offset by unfavorable foreign currency movements.
- Diluted EPS was $2.48 for the quarter versus $2.04 a year earlier; nine-month diluted EPS was $6.93 versus $4.94, a 40% increase. Non-GAAP diluted EPS for the quarter was $2.37 versus $2.13.
- Nine-month operating cash flow was $1,212.8 million, up from $961.1 million, and includes $107.0 million of income tax refunds and associated interest and penalties.
- Cash and cash equivalents reached $932.7 million at March 31, 2025, up from $238.4 million at June 30, 2024, while total debt outstanding was reduced to $675.0 million from $707.2 million in total debt at June 30, 2024.
- The company returned capital through $200.0 million of share repurchases and $233.3 million of dividends paid during the nine months; the board declared a $0.53 quarterly dividend on April 23, 2025.
- Risk factors added include macroeconomic and supply chain pressures, newly announced U.S. tariffs on imports from Canada, Mexico, and China with potential retaliation, and currency volatility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, ResMed kept $0.28.
- Revenue$1.29B100.0%
- Cost of revenue−$525.3M40.7%
- Gross profit$766.4M59.3%
- Operating costs−$340.1M26.3%
- Operating income$426.3M33.0%
- Interest, other & tax−$61.2M4.7%
- Net income$365.0M28.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed April 24, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $1.29B$1.20B | +7.9% |
| Cost of Revenue | $525.33M$504.20M | +4.2% |
| Gross Profit | $766.41M$692.78M | +10.6% |
| R&D Expenses | $83.94M$77.07M | +8.9% |
| SG&A Expenses | $245.30M$229.92M | +6.7% |
| Operating Expenses | $340.14M$318.20M | +6.9% |
| Operating Income | $426.27M$374.58M | +13.8% |
| Net Income | $365.04M$300.49M | +21.5% |
| EPS (Basic) | $2.49$2.04 | +22.1% |
| EPS (Diluted) | $2.48$2.04 | +21.6% |
| Shares Outstanding (Basic) | 146.72M146.96M | −0.2% |
| Shares Outstanding (Diluted) | 147.22M147.45M | −0.2% |
05—Questions
Frequently Asked Questions
What drove ResMed's revenue and margin growth in the third quarter of fiscal 2025?
Net revenue increased $94.8 million, or 8%, to $1,291.7 million, with a 9% increase on a constant currency basis. Sleep and Breathing Health devices and masks grew on increased demand and unit sales. Gross margin rose to 59.3% from 57.9%, due primarily to manufacturing and logistics efficiencies, component cost improvements, and favorable product mix, partially offset by unfavorable foreign currency movements.
How did operating expenses and other income change?
For the quarter, selling, general, and administrative expenses rose 7% to $245.3 million, or 19.0% of net revenue, mainly on employee-related costs and marketing. Research and development expenses rose 9% to $83.9 million, or 6.5% of net revenue. Total other income (loss), net was a loss of $8.6 million, compared with income of $0.8 million, mainly due to a $5.6 million loss on equity investments versus a $13.9 million gain in the prior-year quarter. Net interest moved to income of $0.8 million from expense of $11.0 million due to lower debt levels.
Why was the effective tax rate lower this year?
The effective income tax rate was 12.6% for the three months and 16.3% for the nine months ended March 31, 2025, compared with 20.0% and 19.7% a year earlier. The filing attributes the decrease primarily to interest and penalties refunded by the IRS due to amended returns, windfall tax benefits from share-based award vesting or settlement, and a shift in the global mix of earnings. The company also notes an income tax receivable of $31.7 million expected to be received by March 31, 2026.
What legal and regulatory risks does the filing highlight?
The company is defending patent infringement suits brought by New York University, which are on appeal before the Federal Circuit, and by Cleveland Medical, where a PTAB decision is expected by May 6, 2025. The company says it cannot make a reasonable estimate of loss for matters still open. It also cites uncertainty from U.S. healthcare policy changes, FDA disruptions tied to recent executive actions, and new tariffs on imports from Canada, Mexico, and China that could affect revenue and sourcing costs.
What is ResMed's liquidity position and capital allocation activity?
At March 31, 2025, cash and cash equivalents totaled $932.7 million, of which $409.3 million was held in the United States. The company had $1,500.0 million available under its revolving credit facility, for combined liquidity of $2,432.7 million, and $675.0 million outstanding across the revolver, term credit agreement, and senior notes. It was in compliance with its debt covenants. During the nine months, it repurchased 842,946 shares for $200.0 million and paid $233.3 million in dividends, and 11.2 million shares remained available under its repurchase authorization.
06—Continue