Resmed Inc ((RMD)) has held its Q3 earnings call. Read on for the main highlights of the call.
ResMed Inc’s recent earnings call showcased a positive outlook, driven by strong revenue growth, gross margin expansion, and strategic initiatives. The company demonstrated resilience in the face of challenges such as sleep lab backlogs and foreign currency impacts, maintaining a focus on innovation and strategic expansions.
Strong Revenue Growth
ResMed reported a robust revenue increase for Q3 FY2025, reaching $1.29 billion, which represents an 8% headline increase and 9% in constant currency terms. This growth was fueled by a 7% increase in device sales globally and a 12% increase in masks and other sales in constant currency.
Gross Margin Expansion
The company achieved a gross margin expansion of 140 basis points, reaching 59.9% in the March quarter. This improvement was attributed to efficiencies in manufacturing and logistics, as well as favorable product mix shifts.
Successful Launch of New Products
ResMed successfully launched new products, including the Nite Owl and the AirSense 11 version of VPAP Tx, which contributed to the company’s technological advancements and customer offerings in Q3.
Recognition for Innovation
ResMed was recognized as one of the top 100 global innovators in the Lexus Nexus list, highlighting its commitment to pioneering innovation and maintaining a market-leading position.
Strong Cash Flow and Net Income
The company reported strong cash flow from operations amounting to $579 million, alongside an 11% increase in net income for the March quarter. Non-GAAP diluted earnings per share also rose by 11% to $2.37.
Expansion of Manufacturing Facilities
ResMed is expanding its manufacturing capabilities with a new advanced facility in Calabasas, California, which will nearly double its manufacturing footprint in the US.
Increased Share Buyback Program
Reflecting confidence in its financial health, ResMed plans to enhance its share buyback program, targeting approximately $100 million in share purchases per quarter starting in Q4 FY2025.
Tariff Exemptions Maintained
The company confirmed that it will continue to benefit from tariff exemptions on its products imported into the US, mitigating potential impacts from new tariffs.
Ongoing Sleep Lab Backlogs
ResMed faces challenges with significant backlogs in sleep labs, which hinder efficient diagnosis and treatment of new patients.
Foreign Currency Impact
Year-over-year foreign currency movements negatively impacted ResMed’s revenue by approximately $13 million during the March quarter.
Forward-Looking Guidance
ResMed’s forward-looking guidance remains optimistic, with expectations of continued revenue growth and margin expansion. The company plans to increase its share buyback program to $100 million per quarter, underscoring its confidence in its financial position despite global uncertainties. Sales growth is anticipated across various regions, supported by strategic investments in manufacturing and innovation.
In summary, ResMed Inc’s earnings call painted a picture of a company on a strong growth trajectory, driven by strategic initiatives and innovation. Despite facing some challenges, the overall sentiment was positive, with a focus on expanding capabilities and maintaining financial strength.