ResMed Inc.’s RMD adjusted earnings per share (EPS) in the third quarter of fiscal 2025 were $2.37, up 11.3% year over year. The metric beat the Zacks Consensus Estimate by 0.4%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
The adjustments include certain non-recurring expenses/benefits like the amortization of acquired intangibles, along with the income tax effect on those adjustments.
GAAP EPS in the reported quarter was $2.48, up 21.6% from the year-ago level.
Following the announcement, shares of RMD rose 2.6% in the after-market trading yesterday.
RMD’s Q3 Revenues
On a reported basis, revenues increased 7.5% year over year (up 9% at the constant exchange rate or CER) to $1.29 billion. The figure topped the Zacks Consensus Estimate by 0.5%.
ResMed’s Q3 Sales: A Closer View
ResMed operated through two reporting units, namely Sleep and Respiratory Care and Software as a Service (SaaS).
In alignment with the 2030 Strategy announced during Investor Day in September 2024, these reporting units have been renamed to Sleep and Breathing Health (formerly Sleep and Respiratory Care) and Residential Care Software (formerly SaaS). The methodology for attributing financial results to these reporting units remains unchanged. ResMed noted that revenues from prior periods are consistent and comparable to the previous report.
Sleep and Breathing Health
Total revenues improved 8% (up 9% at CER) from the prior-year period’s level to $1.13 billion. The figure topped our model’s projection of $1.10 billion.
Within this business, revenues from global Devices totaled $676.2 million, up 6% (7% at CER). Masks and other global revenues amounted to $454.4 million, up 11% (12% at CER). Both increases are on a year-over-year basis. Our model had forecasted revenues of $671.5 million from Devices, and $449 million from Masks and others.
On a geographic basis, the segment’s revenues in the combined Europe, Asia and other markets rose 5% (up 8% at CER) to $381.3 million. Our model anticipated revenues worth $380 million.
In the United States, Canada and Latin America, revenues totaled $749.3 million, up 9% year over year. Our model projected revenues of $902.7 million.
Residential Care Software
Revenues in this segment grew 9% year over year to $161.2 million, which fell short of our model’s projection of $162.1 million.
ResMed’s Margin Performance
The adjusted gross profit in the quarter under review rose 10.5% to $773.8 million despite a 4.3% uptick in the adjusted cost of sales (excluding the amortization of acquired intangibles, masks with magnet field safety notification expenses and Astral field safety notification expenses).
The adjusted gross margin for the fiscal third quarter was 59.9%, reflecting an expansion of 138 basis points (bps).
Selling, general and administration expenses rose 6.7% year over year to $245.3 million. Research and development expenses increased 8.9% to $83.9 million. The adjusted operating income was $444.6 million in the quarter under discussion, up 13% from the year-ago quarter’s level. The adjusted operating margin expanded 154 bps year over year to 34.4%.
ResMed Inc. Price, Consensus and EPS Surprise
ResMed Inc. Price, Consensus and EPS Surprise
ResMed Inc. price-consensus-eps-surprise-chart | ResMed Inc. Quote
RMD’s Financial Updates
ResMed exited the third quarter of fiscal 2025 with cash and cash equivalents of $932.7 million compared with $521.9 million at the end of fiscal second quarter.
Total debt (short and long-term) totaled $673.0 million compared with $672.8 million at the end of the fiscal second quarter.
The cumulative net cash provided by operating activities at the end of the fiscal third quarter was $1.21 billion compared with $961.1 million in the year-ago period.
The company paid out $78 million in dividends in the fiscal third quarter and also repurchased 314,000 shares for consideration of $75 million as part of its ongoing capital management.
Our Take on RMD Stock
ResMed ended the third quarter of fiscal 2025 with better-than-expected results, wherein both earnings and revenues beat estimates. The company achieved robust revenue growth across all product and geographic categories. Masks and accessories growth was boosted by the ongoing rollout of Brightree ReSupply program and new patient setups. Snap technology has helped the segment grow in the U.S. market.
Strong market performance from the AirSense 10 and AirSense 11 platforms drove global device sales. A strong focus on operational excellence drove the expansion in both margins, which is highly encouraging.
ResMed made some notable strides in the fiscal third quarter, such as announcing the launch of the NightOwl — an FDA-cleared home sleep apnea test (HSAT) — in the United States. Additionally, the company introduced a comprehensive brand evolution designed to unify its brand portfolio to serve more people and healthcare providers worldwide. All these developments bode well for the stock.
RMD’s Zacks Rank and Key Picks
ResMed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are AngioDynamics ANGO, Veeva Systems VEEV and Masimo MASI.
AngioDynamics, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter fiscal 2025 adjusted EPS of 3 cents, which beat the Zacks Consensus Estimate of a loss of 13 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.
Revenues of $72 million beat the Zacks Consensus Estimate by 2%. ANGO has an estimated fiscal 2026 earnings growth rate of 27.8% compared with the S&P 500 composite’s 10.5%. The company beat on earnings in each of the trailing four quarters, the average surprise being 70.9%.
Veeva Systems, sporting a Zacks Rank #1 at present, posted fourth-quarter fiscal 2025 adjusted EPS of $1.75, which exceeded the Zacks Consensus Estimate by 10.1%. Revenues of $720.9 million surpassed the Zacks Consensus Estimate by 3.2%.
VEEV has an estimated long-term earnings growth rate of 26.6% compared with the industry’s 20.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.9%.
Masimo, currently sporting a Zacks Rank #1, reported a fourth-quarter 2024 adjusted EPS of $1.80, which surpassed the Zacks Consensus Estimate by 20.8%. Revenues of $600.7 million topped the Zacks Consensus Estimate by 0.8%.
MASI has an estimated earnings yield of 3.5% for fiscal 2025 compared with the industry’s 3.6%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.4%.
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