Resmed reported strong fourth-quarter fiscal year 2025 results while laying out its sleep apnea and home medical equipment (HME) business plans during a July 31 earnings call.
“In addition to being the world’s leading sleep health and medical devices company, ResMed continues to build a global digital health ecosystem, encompassing sleep health, breathing health and health-care delivery in the home,” CEO Mick Farrell told investors. “We continue to see robust demand for our products and are now serving more than 154 million lives through our hardware and software platforms, as well as our technology solutions.”
In adding that the company is “well on our way to achieving our Resmed 2030 goal of improving over 500 million people’s lives by 2030,” Farrell said Resmed closed out its fiscal 2025 year with “10% year-over-year reported revenue growth and 230 basis points of year-over-year gross margin expansion. We continued our disciplined approach to investments in both research and development as well as SG&A [selling, general & administrative expenses], and we delivered another quarter of very strong free cash flow.”
Sleep apnea business and goals
A fiscal year 2025 free cash flow of $1.7 billion, Farrell said, gives Resmed “significant flexibility to both invest in our business and return capital to our shareholders. On the inorganic growth strategy front, we are focused on finding tuck-in size acquisitions that will help us accelerate towards our Resmed 2030 strategy.”
As examples, Farrell pointed to the late-2021 acquisition of Ectosense, producer of cloud-connected home sleep test devices for sleep apnea, and its NightOwl fingertip test system that Resmed launched in April of this year. Farrell also mentioned the May acquisition of VirtuOx, a diagnostic testing facility specializing in sleep, respiratory and cardiac conditions.
“ResMed remains laser focused on helping the more than 2.3 billion people worldwide that suffer from sleep apnea, insomnia or respiratory insufficiency due to COPD [chronic obstructive pulmonary disease] or neuromuscular disease and all those that need care delivered in the home,” Farrell said. “ResMed’s very strong free cash flow affords us the ability to invest in the business through R&D and SG&A expenses. But in addition to that, to also have significant funds available for strategic technology and [what] I would call seamless pathway-type tuck-in acquisitions.”
Farrell said Resmed remains dedicated to helping patients to maintain their sleep apnea regimens. “Our resupply attrition predictor helps Brightree customers in the U.S. to better manage patients who are at risk of dropping off or quitting positive airway pressure therapy,” he said. “This technology enables our HME [home medical equipment] partners to create personal touch points with patients and to ultimately increase long-term adherence of those patients.
“Greater long-term adherence leads to better patient outcomes, happier physicians, lower total cost of care for payers, and better resupply volumes that are beneficial for HME providers and obviously, for Resmed. As our trained AI technologies improve with more and more data, we foresee Resmed solutions will transform into proactive, personalized health-care companions.”
The company’s data can also potentially be used to improve outcomes for sleep patients present and future. “ResMed is extremely well positioned to turn our over 23 billion nights of respiratory medical data, as well as our three-plus decades of sleep science and sleep medicine knowledge into personalized treatments and personalized insights that integrate seamlessly with wearable data, health data and virtual care,” Farrell said. “In addition to our products, we see multiple applications for AI and GenAI in our business processes.”
Operations in a time of tariff volatility
Farrell noted the company’s evolving global manufacturing footprint, saying, “We’re approaching the official opening of our newest manufacturing location in Calabasas, California. This site will double the size of our current manufacturing footprint in the United States and is designed for us to scale up our U.S.-made product volume over the coming years and leverage the amazing technology capabilities of folks in east L.A. in terms of aeronautical and automotive industries that we use in the field of motor technology and motor manufacturing.”
The CEO also addressed Resmed’s strategic position in turbulent economic times.
“Last quarter, I spoke to three key themes: First, that ResMed generates robust free cash flow and has a very strong balance sheet,” Farrell said. “Second, we’re committed to operational excellence as well as driving ongoing operating leverage. And third, that ResMed is a compelling investment opportunity.”
Specifically addressing the shifting conditions caused by tariff changes, the CEO added, “We have a strong, sturdy ship that can go through the waves. Especially amidst the global macro uncertainty that we’re seeing around tariffs and trade and so on, ResMed has a very smooth path. These themes remain highly relevant here as we discuss our fourth quarter, and our fourth quarter results illustrate them well.
“Because our products are used to treat patients with chronic respiratory disabilities, they’ve been subject to global tariff relief for decades, and that has been ongoing and continuing. This affords ResMed the opportunity to remain fully focused on our business and helping the more than 2.3 billion people worldwide that need our help for their sleep apnea or insomnia and their respiratory insufficiency, as well as all those needing our market-leading software for health care delivered in their home.”
On the call, Resmed Chief Financial Officer Brett A. Sandercock announced fourth-quarter revenue of $1.35 billion, “a 10% headline increase and a 9% increase in constant currency terms. Revenue growth reflected positive contributions across our product and resupply portfolio.”
“Breaking it down by regional areas, device sales in the U.S., Canada and Latin America increased by 7%,” Sandercock added. “Mask and other sales increased by 12%, reflecting continued growth in resupply and new patient setups, as well as incremental revenue from two months of owning VirtuOx.”
“We’re a compelling investment opportunity amidst what I would call global macro uncertainty,” Farrell said. “We are delivering products. We’re delivering solutions that customers love — meaning patients, physicians, providers, payers — and they vote with their wallets. They buy our stuff more than our competitors’. And we’ve been closely monitoring the global trade environment and the evolving regulatory landscape in Washington, Brussels and Beijing.”
