Sleep Apnea Device Maker ResMed Is A Durable MedTech, With Positive Fundamentals, Says Analyst

On Thursday, ResMed Inc RMD reported first-quarter adjusted EPS of $2.20, up 34% year over year, beating the consensus of $2.04.

The company reported sales of $1.224 billion, up 11%, beating the consensus of $1.18 billion, driven by increased demand for sleep devices and masks portfolio and strong growth across the Residential Care Software business.

Residential Care Software revenue increased by 12% on a constant currency basis, reflecting continued organic growth in the Residential Care Software portfolio.

Gross margin increased by 420 basis points mainly due to manufacturing efficiencies, component cost improvements, and an increase in average selling prices. Non-GAAP gross margin increased by 320 basis.

“Our first-quarter fiscal year 2025 results reflect ongoing momentum and strong execution across all areas of our business,” said Mick Farrell, Chairman and CEO of ResMed. “We delivered 11% year-over-year revenue growth, and our focus on operational excellence resulted in another quarter of year-over-year margin expansion and a 34% increase in operating profit.”

Adjusted operating income increased 27% to $406.4 million. Adjusted net income increased by 35% to $325 million.

William Blair notes that ResMed’s revenue and earnings per share surpassed expectations, with EPS exceeding their estimates by $0.16 (an 8% beat). The analyst rates the stock Outperform.

The company’s strong execution, leading market position, and balanced emphasis on growth and profitability reinforce the analyst’s confidence in ResMed’s solid fundamentals and positive outlook.

Following another quarter of robust core performance and the release of its five-year strategic and financial outlook, William Blair sees ResMed well-positioned to capitalize on enduring sleep health trends.

While concerns surrounding GLP-1 therapies may re-emerge as investors assess upcoming developments, including potential label expansions, ResMed’s strong revenue and earnings growth are expected to sustain momentum, as seen in recent quarters.

“With catalysts to come from margin expansion, new product launches, and the recent resolution to the competitive consent decree, we believe the fundamentals in this durable medtech growth story remain positive,” William Blair analyst writes.

Price Action: RMD stock is up 7.81% at $257.71 at last check Friday.

Image via Shutterstock

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