RMD Financial Analysis

Analysis Date: 1/31/2025

Business Model

ResMed generates revenue primarily from two segments: Sleep and Breathing Health (87% of revenue) and Residential Care Software (13% of revenue)

Revenue Sources

• Sleep and Breathing Health devices (52% of revenue)
• Masks and other products (36% of revenue)
• Residential Care Software (12% of revenue)

Revenue Distribution by Channel

• U.S., Canada and Latin America: 59%
• Europe, Asia and Other Markets: 29%

Income Statement Analysis

• Revenue grew 10.3% YoY driven by strong device and mask sales growth
• Gross margin expanded 300bps YoY to 58.6% due to manufacturing efficiencies
• Operating income grew 51.7% YoY reflecting improved operational leverage

Balance Sheet Analysis

• Strong cash position with $521.9M in cash and equivalents
• Total liabilities decreased 6% reflecting debt reduction
• Stockholders equity increased 8% on retained earnings growth

Cash Flow Analysis

• Operating cash flow increased 13.4% YoY to $634.2M
• Lower investing cash outflow due to reduced acquisition activity
• Financing outflows decreased on lower debt repayments

Capital Allocation

ResMed maintains a balanced capital allocation strategy focused on: 1) Reinvesting 6-7% of revenue in R&D for organic growth, 2) Strategic M&A opportunities, 3) Regular dividend payments ($0.53/share quarterly), and 4) Share repurchases ($75M per quarter)

Management Commentary

Strong device sales growth across all major markets

Gross margin expansion from manufacturing efficiencies

Continued momentum in masks and accessories business

Overall Sentiment: Positive and confident in continued execution of growth strategy

Recommendation

Rating: Buy

Reason for Rating: Strong operational execution, expanding margins, and multiple growth drivers

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 12:52:30 PM