ResMed Earnings Reflect Increased Demand For Sleep Devices, Performance Indicates Positive Dynamics, Opportunities

ResMed Inc. RMD reported fourth-quarter 2024 revenue of $1.22 billion, up 9% year-over-year and up 10% on a constant currency basis, in line with the consensus of $1.22 billion.

The growth was driven by increased demand for sleep devices and masks portfolio and strong growth across Software as a service business.

Gross margin improved 350 bps to 58.5%; non-GAAP gross margin improved 330 bps to 59.1%, mainly due to reduced freight and manufacturing cost improvements, increased average selling prices, and a favorable product mix.

Income from operations increased 38%; non-GAAP income from operations up 30%.

The company reported adjusted EPS of $2.08, up from $1.60 a year ago, beating the consensus of $2.07.

The company increased its quarterly dividend by 10% to 53 cents per share.

William Blair writes that despite the short-term impact of the GLP-1 issue, ResMed’s strong quarterly performance indicates positive market dynamics and opportunities.

“With catalysts to come from margin expansion, new product launches, and the recent resolution to the competitive consent decree, we believe the fundamentals of the business remain positive,” the analyst highlights.

ResMed trades at 24.9 times the consensus 2024 EPS of $8.26 below its high-growth large-cap peers.

The analyst keeps the Outperform rating.

In June, Eli Lilly And Co LLY released detailed results from the SURMOUNT-OSA phase 3 trials evaluating tirzepatide injection (10 mg or 15 mg) for moderate-to-severe obstructive sleep apnea (OSA) in adults with obesity, with and without positive airway pressure (PAP) therapy.

Price Action: RMD stock is down 2.02% at $210.23 at last check Friday.

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