RMD
HealthcareResMed
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XBRL · SEC EDGAR2009–2025(17yr)| Metric | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $920.7M | $1.1B | $1.2B | $1.4B | $1.5B | $1.6B | $1.7B | $1.8B | $2.1B | $2.3B | $2.6B | $3.0B | $3.2B | $3.6B | $4.2B | $4.7B | $5.1B | +9.8% |
| Gross Profit | $553.8M | $655.5M | $741.3M | $820.7M | $940.7M | $989.8M | $1.0B | $1.1B | $1.2B | $1.4B | $1.5B | $1.7B | $1.8B | $2.0B | $2.4B | $2.7B | $3.1B | +15.1% |
| Gross Margin | 60.1% | 60.0% | 59.6% | 60.0% | 62.1% | 63.7% | 60.2% | 58.0% | 58.1% | 58.2% | 59.0% | 58.1% | 57.5% | 56.6% | 55.8% | 56.7% | 59.4% | +2.7pp |
| Operating Income | $190.3M | $240.4M | $266.9M | $294.4M | $354.8M | $405.1M | $409.2M | $429.0M | $425.8M | $541.8M | $579.3M | $809.7M | $903.7M | $1.0B | $1.1B | $1.3B | $1.7B | +27.7% |
| Operating Margin | 20.7% | 22.0% | 21.5% | 21.5% | 23.4% | 26.1% | 24.4% | 23.3% | 20.6% | 23.2% | 22.2% | 27.4% | 28.3% | 28.0% | 26.8% | 28.2% | 32.7% | +4.6pp |
| Net Income | $146.4M | $190.1M | $227.0M | $254.8M | $307.1M | $345.3M | $352.9M | $352.4M | $342.3M | $315.6M | $404.6M | $621.7M | $474.5M | $779.4M | $897.6M | $1.0B | $1.4B | +37.2% |
| Net Margin | 15.9% | 17.4% | 18.3% | 18.6% | 20.3% | 22.2% | 21.0% | 19.2% | 16.6% | 13.5% | 15.5% | 21.0% | 14.8% | 21.8% | 21.3% | 21.8% | 27.2% | +5.4pp |
| Free Cash Flow | $129.2M | $131.4M | $216.6M | $336.0M | $339.2M | — | — | $489.4M | $351.8M | $442.4M | $390.3M | $706.9M | $634.0M | $216.3M | $573.6M | $1.3B | $1.7B | +27.6% |
| FCF Margin | 14.0% | 12.0% | 17.4% | 24.6% | 22.4% | — | — | 26.6% | 17.0% | 18.9% | 15.0% | 23.9% | 19.8% | 6.0% | 13.6% | 27.8% | 32.3% | +4.5pp |
| EPS (Diluted) | $0.95 | $1.23 | $1.44 | $1.71 | $2.10 | $2.39 | $2.47 | $2.49 | $2.40 | $2.19 | $2.80 | $4.27 | $3.24 | $5.30 | $6.09 | $6.92 | $9.51 | +37.4% |
1. THE BIG PICTURE
ResMed is currently operating in a "goldilocks" environment where it is capturing market share from a recalled competitor while simultaneously transitioning from a hardware manufacturer into a high-margin digital health platform. By integrating artificial intelligence into its massive installed base of 30 million connected devices, ResMed is creating a data-driven moat that makes its ecosystem increasingly difficult for healthcare providers to leave.
2. WHERE THE RISKS HIT HARDEST
The core Sleep and Breathing Health segment, which generated $1.26 billion in the most recent quarter (10-Q), is directly threatened by the rise of GLP-1 pharmaceuticals. Because these drugs treat obesity—a primary driver of obstructive sleep apnea—they could render ResMed’s "market-leading" devices (8-K) obsolete for a portion of the population. Furthermore, ResMed’s pricing power is vulnerable to healthcare consolidation; as home medical equipment (HME) providers merge, they gain the leverage to demand price concessions that could compress ResMed's industry-leading 33.4% operating margin (XBRL).
3. WHAT THE NUMBERS SAY TOGETHER
ResMed’s financial profile is defined by exceptional efficiency, converting 29.5 cents of every dollar of revenue into free cash flow—the highest rate among its peer group (XBRL). While ResMed’s trailing-twelve-month revenue growth stands at 9.8%, the most recent quarter showed an acceleration to 11% (8-K). This uptick is driven largely by the masks and accessories business, which grew 16% as ResMed successfully monetized its existing patient base (10-Q).
The market’s sentiment appears cautious despite these results; short interest stands at 8.0% of the float, with nearly eight days required for short-sellers to cover their positions (Yahoo Finance). This skepticism likely reflects the $6 million in restructuring charges recorded this quarter as ResMed streamlines its workforce to protect its margins against inflationary pressures and shipping disruptions in the Red Sea (8-K).
4. IS IT WORTH IT AT THIS PRICE?
At 20.4x forward earnings, ResMed trades exactly in line with the peer median (XBRL). According to CAPM analysis, this valuation implies the market expects 4.5% long-term growth. This appears conservative given that ResMed’s actual revenue growth is currently double that rate and its net margin of 27.2% is the highest among its peers, including Medtronic (13.9%) and GE HealthCare (9.9%).
The valuation is supported by a robust balance sheet featuring $753.2 million in net cash (XBRL), which provides the flexibility to sustain a 0.9% dividend yield and a 1.3% buyback yield. However, if growth were to slow to a GDP-pace of 2.5%, the justified multiple would drop to 14.5x, representing significant downside (CAPM analysis). The current price is only "right" if ResMed can prove that its AI-enabled "Smart Comfort" device and digital ecosystem can maintain patient adherence even as new pharmaceutical treatments enter the market.
5. WHAT WOULD CHANGE THIS VIEW?
- Constructive if the "Smart Comfort" AI device leads to a measurable increase in patient adherence rates, effectively raising the lifetime value of each device user.
- Cautious if clinical data or VA disability rating adjustments lead to a reduction in reimbursement for sleep apnea treatments, directly hitting the 12% growth currently seen in the Sleep and Breathing segment.
- Cautious if the "Senior Living and Long-Term Care" vertical in the software segment continues to underperform, suggesting structural headwinds in residential care (10-Q).
6. BOTTOM LINE
Structural Advantage: A proprietary digital health ecosystem with 30 million connected patients that generates high-margin recurring revenue through masks and software integration. Bottom Line: ResMed is a highly efficient cash-flow machine that remains the best play in sleep health, provided investors can stomach the long-term pharmaceutical risk.
1. Top 5 Material Risks
- Pharmaceutical Competition: The emergence of GLP-1s for weight loss and diabetes management may reduce the severity or prevalence of obstructive sleep apnea (OSA), potentially rendering ResMed’s core sleep and breathing health products obsolete or noncompetitive.
- Healthcare Consolidation: Increasing concentration among home medical equipment (HME) providers and durable medical equipment (DME) suppliers grants these customers greater purchasing power to negotiate price concessions, which could decrease ResMed’s revenues and earnings.
- Supply Chain and Macroeconomic Volatility: Inflation, shipping disruptions (such as those in the Red Sea), and reciprocal tariffs on raw materials and electronic components increase operating costs and threaten ResMed’s ability to meet product demand.
- Regulatory and Reimbursement Shifts: Changes in government coverage policies, such as Medicare competitive bidding or adjustments to VA disability ratings for sleep apnea, could lead to lower reimbursement rates and reduced demand for ResMed’s products.
- Information Technology and Cybersecurity: ResMed is increasingly dependent on IT infrastructure; any failure, breach, or cyberattack—particularly those exploiting AI—could result in material loss of business, substantial legal liability, and significant reputational harm.
2. Company-Specific Risks
- Philips Recall Opportunity: The temporary market absence of a major competitor, Philips, has driven increased demand for ResMed products, but the eventual return of Philips could lead to reduced demand and pricing pressure.
- VirtuOx Integration: The acquisition of VirtuOx introduces new risks related to direct healthcare oversight, including compliance with the federal Anti-Kickback Statute and False Claims Act, as well as the need to manage new billing and documentation requirements.
- Manufacturing Concentration: ResMed manufactures substantially all of its products outside the U.S., with key facilities in Sydney, Australia, and Singapore, making ResMed vulnerable to natural disasters or regional geopolitical instability.
- Software Renewal Dependency: The Residential Care Software business relies on customers renewing, upgrading, and expanding term-based agreements; any decline in these rates directly impacts future operating results.
3. Regulatory/Legal Risks
- Fraud and Abuse Laws: ResMed is subject to the federal Anti-Kickback Statute, the False Claims Act, and the Civil Monetary Penalties Law. Past violations led to a $40.6 million settlement in 2019 and a five-year Corporate Integrity Agreement (CIA).
- Data Privacy Compliance: ResMed must comply with HIPAA, GDPR, and the CCPA. Failure to secure protected health information (PHI) or comply with business associate agreements can result in significant fines, regulatory investigations, and civil liability.
- FDA Oversight: Product modifications or new introductions require FDA clearance (often via the 510(k) pathway). Stricter FDA review criteria or potential "sunsetting" of older predicate devices could delay product launches and increase compliance costs.
- Tax Audits: ResMed is currently under audit by the Australian Taxation Office (ATO) for the 2018 tax year and faces ongoing scrutiny regarding transfer pricing and the valuation of intellectual property across multiple jurisdictions.
4. Financial Impact Map
Pharmaceutical Competition (GLP-1s) → Net Sales and Gross Margins → Potential decrease in demand and pricing power for sleep and breathing health devices. Healthcare Consolidation → Revenues and Consolidated Earnings → Price concessions and volume reductions negotiated by HME/DME providers. Supply Chain Disruptions → Cost of Sales → Increased costs for raw materials, electronic components, and freight, leading to compressed profit margins. Reimbursement Reductions → Net Sales → Lower reimbursement rates from government and private payors directly impacting the price and volume of products sold. Cybersecurity Breach → Operating Results → Potential for material loss of business, substantial legal liability, and costs associated with system remediation and regulatory fines.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 10-Q | Jan 2026 | Dec 2025 |
| 8-K | Jan 2026 | — |
| 14A | Oct 2025 | — |
| 10-K | Aug 2025 | Jun 2025 |