ResMed 2025-26: $1.7B FCF, GLP-1 Tailwind, $600M Buyback
FY25 (Jun '25 year-end) revenue $5.15B (+10%); op income $1.69B (+28%); NI $1.40B (+37%); EPS $9.51 (+37%). Q4 +10% headline. Gross margin Q4 61.4% (+230bp). FCF $1.7B. ResMed 2030 strategy. Acquired Somnoware + Ectosense + VirtuOx. FY26 guide: GM 61-63%, SG&A 19-20%, R&D 6-7%; ~$150M/qtr buyback (vs $75-100M prior).
Key takeaways
- Operating earnings stepped up materially. Op income $1.69B (+28%) on revenue +10% — operating margin expansion of 470bp YoY (from 28.2% to 32.7%). Gross margin Q4 61.4% (+230bp YoY, +150bp sequential). Manufacturing + procurement + logistics efficiency + favorable FX.
- GLP-1 is a tailwind, not a headwind. Lancet study: CPAP reduces all-cause mortality 37% / cardiovascular mortality 55%. Real-world evidence: GLP-1 + PAP combination = higher adherence, better outcomes. The bear case (GLP-1 reduces obesity → reduces sleep apnea → reduces ResMed TAM) keeps getting refuted by data.
- Buyback step up to ~$150M/quarter from ~$75M historic. That's a 2x acceleration. Combined with $0.53/quarter dividend (raised) → meaningful capital return inflection. Tax-efficient deployment of $1.7B FCF.
- Three acquisitions in FY25 advance ResMed 2030 strategy. Somnoware (sleep diagnostics workflow) + Ectosense (home sleep test innovator) + VirtuOx (diagnostic delays / patient flow). All three plug into the "find more sleep apnea patients faster" funnel — addressing the ~80% undiagnosed.
- AI/digital health embedded. Dawn (AI digital assistant in myAir) + smart coaching + ReSupply attrition predictor. AirSense 11 platform. ResMed brand evolution + DTC marketing. The platform is the moat; AI/digital amplifies it.
Business
ResMed is the global #1 in sleep apnea + respiratory care, with three product franchises:
- Devices (~50% of revenue). CPAP / APAP / BiPAP machines. AirSense 11 is the lead platform. AirSense 10 still installed base. Q4 device sales US/Canada/LatAm +7% cc; Europe/Asia +10% cc.
- Masks + Accessories (~35%). Refresh + ReSupply + new patient activations. AirTouch N30i (fabric-based interface) + Apple Vision Pro Kontor Head Strap collaboration. Q4 Europe/Asia +7% cc.
- Residential Care Software (~15%). MEDIFOX DAN (German LTC/HME software) + Brightree + AirView. Q4 +9% cc (-2% from earlier 12% on integration). Now being integrated into broader org per ResMed 2030.
Strategic moves in FY25:
- ResMed 2030 strategy: three pillars (core sleep + breathing growth, expand into adjacencies, leverage digital health)
- Somnoware acquired: sleep diagnostics workflow software
- Ectosense acquired: home sleep test innovator
- VirtuOx acquired: diagnostic flow / reducing delays
- New manufacturing facility in Calabasas, CA
- Brand evolution / unified global brand portfolio
- Distribution + R&D investment in US
FY25 financial performance (Jun '25 year-end)
| Metric (FY) | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($B) | 3.58 | 4.22 | 4.69 | 5.15 |
| Revenue YoY | n/a | +18% | +11% | +10% |
| Gross profit ($B) | 2.02 | 2.36 | 2.66 | 3.05 |
| Gross margin | 56.6% | 55.8% | 56.7% | 59.4% |
| Op income ($M) | 1,000 | 1,132 | 1,320 | 1,685 |
| Op margin | 28.0% | 26.8% | 28.2% | 32.7% |
| Net income ($M) | 779 | 898 | 1,021 | 1,401 |
| Diluted EPS ($) | 5.30 | 6.09 | 6.92 | 9.51 |
| FCF ($M) | 195 | 559 | 1,286 | 1,662 |
| Capex ($M) | -156 | -134 | -115 | -90 |
| Total debt ($M) | 918 | 1,580 | 874 | 852 |
| Dividends ($M) | -245 | -258 | -282 | -311 |
| Buyback ($M) | 0 | 0 | -150 | -300 |
The earnings print is excellent: gross margin step from 56.7% → 59.4% FY25 (+270bp); op margin 28.2% → 32.7% (+450bp); EPS $9.51 (+37%); FCF $1.66B (+29%).
The fiscal year ending June makes FY25 = July 2024 - June 2025; Q1-Q4 of FY25 coincide with calendar Sep '24 - Jun '25 quarters. Q4 (June '25) was the strongest of the cycle.
Capital allocation
- Capex: $-90M FY25 (-22% YoY) — light-asset business model, capex declining as facility build normalizes.
- Dividends: $-311M FY25 (+10% YoY); $0.53/quarter base. Increased FY26 quarterly dividend.
- Buybacks: $-300M FY25 (vs $-150M FY24, +100%). FY26 plan: ~$150M/quarter = $600M/year (4x FY24 pace, 2x FY25).
- M&A: Three deals (Somnoware + Ectosense + VirtuOx) — all bolt-ons to ResMed 2030 patient flow strategy.
- Debt: $852M (vs $874M FY24, $1.58B FY23 — paid down significantly post FY23).
The combination of $0.6B buyback + $0.31B dividend = $0.9B return + $1.7B FCF generation = meaningful net cash buildup or further M&A capacity. Capital is no longer the constraint.
FY26 outlook (per Q4 FY25 call, 2025-07-31)
| FY26 framework | Range |
|---|---|
| Gross margin | 61% to 63% |
| SG&A as % of revenue | 19% to 20% |
| R&D as % of revenue | 6% to 7% |
| Buyback pace | |
| Dividend | Quarterly raised |
The GM range of 61-63% is the highest mgmt has guided in years; depends on continued procurement + logistics + manufacturing leverage. Effective tax rate FY25 was 19-21%; FY26 likely similar.
ResMed historically does not give explicit revenue guidance — hint: Q1 FY26 expected to see continued revenue strength similar to Q4 FY25 trajectory.
Key risks
- GLP-1 demand impact (long-term). Bear thesis: weight loss → reduced sleep apnea → smaller TAM. Real-world evidence so far refutes this; mgmt keeps reinforcing GLP-1 is awareness driver. But long-term is the risk.
- Tariffs. ResMed has tariff exemption for products treating chronic respiratory conditions (medical exemption) — this is the protective barrier. Loss of exemption = material risk.
- Competitive bidding (CMS). US Medicare competitive bidding cycle could compress reimbursement for HME providers, indirect impact on ResMed device pricing.
- Consumer wearable / pharma competition. Apple + Samsung integrating sleep apnea detection in wearables. Could expand awareness (positive) or eventually compete (negative).
- FX volatility. ~50% non-US revenue. FX headwinds historically meaningful.
- Software integration (MEDIFOX DAN). Residential Care Software being integrated into broader org per 2030 — execution risk.
Bottom line
RMD FY25 is a step-function operating year: revenue +10%, op margin +470bp to 32.7%, FCF +29%, GM expansion to 59.4%. The triple acquisitions (Somnoware/Ectosense/VirtuOx) address the diagnostic funnel — the structural barrier to faster patient onboarding. GLP-1 narrative continues to flip from headwind to tailwind on real-world data. FY26 guide of 61-63% GM is aggressive but consistent with trajectory. Capital return inflection ($600M annual buyback + raised dividend) reflects FCF generation. Risks are GLP-1 long-tail + tariffs + CMS bidding. Best-in-class sleep + breathing health franchise.
Citations
- ResMed Inc. FY25 (Jun '25) Form 10-K (filed August 2025, SEC EDGAR).
- RMD Q4 FY25 earnings call, 2025-07-31 — FY25 FCF $1.7B; gross margin Q4 61.4% (+230bp); FY26 guide (GM 61-63%, SG&A 19-20%, R&D 6-7%, $150M/qtr buyback); Somnoware + Ectosense + VirtuOx acquisitions; ResMed 2030 strategy.
- RMD Q3 FY25 earnings call, 2025-04-23 — gross margin +140bp to 59.9%; tariff exemption confirmed; Calabasas CA facility expansion; Lancet study referenced.
- RMD Q2 FY25 earnings call, 2025-01-30 — non-GAAP GM 59.2% (+230bp); GLP-1 + PAP combination higher adherence; Apple Vision Pro Kontor Head Strap.
- RMD Q1 FY25 earnings call, 2024-10-24 — GM +320bp to 59.2%; AirSense 10/11 platforms.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).