Executive Summary
ResMed reported a solid QQ3 2025 performance, with revenue of $1.29 billion, up 8% year over year (9% in constant currency), and a gross margin of 59.3% (59.9% reported in commentary). Operating income reached $426.3 million, yielding a 33.0% operating margin, and net income of $365.0 million for a 28.3% net margin. Diluted EPS was $2.48-$2.49, supported by strong gross margin expansion and disciplined cost management. Free cash flow was $554.9 million, underpinning a robust balance sheet (net cash position of approximately $-93.9 million; cash at end of period ~$933 million) and ample liquidity ($1.5 billion revolver availability).
Strategically, management emphasized a broad digital-health ecosystem and product pipeline that includes Night Owl (home sleep apnea testing), AirView and Somnawhere (cloud-based analytics and clinician tools), and the VPAP TX platform for sleep labs. These investments are coupled with a renewed brand strategy and demand-generation initiatives (CME physician education and consumer messaging) intended to improve diagnostic-to-therapy funnel conversion and patient adherence, in line with the Lancet Respiratory Medicine meta-analysis showing CPAP benefits on mortality and cardiovascular outcomes. The company reaffirmed its commitment to a disciplined capital allocation framework, including increased quarterly share buybacks (target ~$100 million per quarter starting in Q4 FY2025), ongoing R&D investment (6-7% of revenue), and selective tuck-in acquisitions.
Management maintained a cautious but constructive near-term outlook: gross margins in Q4 FY2025 were expected to be broadly flat versus Q3, SG&A to be 18-20% of revenue, and R&D to be 6-7% of revenue, with currency movements as a key risk. Tariff exposure was described as non-material due to established exemptions under the Nairobi protocol, and the company plans to expand US manufacturing capacity (Calabasas facility opening in June 2025) to improve supply resilience and mass resupply capabilities. Overall, the QQ3 results support an affirmative longer-term investment thesis around ResMed’s leadership in sleep and breathing health, software-enabled care delivery, and an expanding home-based care ecosystem.
Key Performance Indicators
Key Insights
Revenue: $1,291.7M; YoY +7.92%; QoQ +0.75%.
Gross profit: $766.4M; gross margin 59.33% (GAAP); YoY gross profit growth +12.45%; QoQ +2.01%.
Operating income: $426.3M; operating margin ~33.00%; YoY +13.80%; QoQ +2.16%.
Net income: $365.0M; net margin ~28.26%; YoY +21.48%; QoQ +5.93%.
EPS (GAAP/diluted): $2.49 / $2.48; YoY EPS +22.06%; QoQ +2.47%.
EBITDA: $478.2M; EBITDARatio ~0.370.
Free cash flow: $554.9M; operating cash flow $578.7M (adjusted for a $107M IRS tax refund); capex $23.8M; D&A $...
Financial Highlights
Revenue: $1,291.7M; YoY +7.92%; QoQ +0.75%.
Gross profit: $766.4M; gross margin 59.33% (GAAP); YoY gross profit growth +12.45%; QoQ +2.01%.
Operating income: $426.3M; operating margin ~33.00%; YoY +13.80%; QoQ +2.16%.
Net income: $365.0M; net margin ~28.26%; YoY +21.48%; QoQ +5.93%.
EPS (GAAP/diluted): $2.49 / $2.48; YoY EPS +22.06%; QoQ +2.47%.
EBITDA: $478.2M; EBITDARatio ~0.370.
Free cash flow: $554.9M; operating cash flow $578.7M (adjusted for a $107M IRS tax refund); capex $23.8M; D&A $51.9M.
Cash & liquidity: cash $933.0M; total debt $839.8M; net debt position -$93.9M; cash-to-debt and revolver availability $1.50B.
Balance sheet health: Total assets $7.566B; total liabilities $2.021B; stockholders’ equity $5.547B; current ratio ~3.41; debt-to-capitalization ~13.2%; cash ratio ~0.99.
Capital allocation: 314k shares repurchased for $75.0M in QQ3; plan to repurchase ~$100.0M per quarter starting in Q4 FY2025; quarterly dividend $0.53 per share.
Key guidance ( FY2025): Gross margin broadly unchanged in Q4; SG&A 18-20% of revenue; R&D 6-7% of revenue; full-year effective tax rate guidance 19-21% (non-GAAP adjustments noted); Calabasas manufacturing facility opening June 2025.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.29B |
7.92% |
0.75% |
| Gross Profit |
766.41M |
12.45% |
2.01% |
| Operating Income |
426.27M |
13.80% |
2.16% |
| Net Income |
365.04M |
21.48% |
5.93% |
| EPS |
2.49 |
22.06% |
2.47% |
Key Financial Ratios
operatingProfitMargin
33%
operatingCashFlowPerShare
$3.94
freeCashFlowPerShare
$3.78
dividendPayoutRatio
21.3%
Management Commentary
Theme: Growth strategy and product innovation. Management highlighted Night Owl as the first full-quarter US commercial rollout of a fingertip-sized home sleep apnea test designed to accelerate the diagnostic funnel and move patients to therapy, integrated with AirView and Somnawhere for a connected care pathway.
Quote (Mick Farrell): Night Owl is a fingertip-sized home sleep apnea test that is being used by physicians, sleep labs, as well as independent diagnostic and testing facilities, to diagnose patients. This supports faster diagnosis and therapy ramp.
Theme: Brand and demand-generation ROI. The company emphasized a refreshed brand strategy and disciplined demand generation across physician education (CME) and consumer outreach, with streaming advertising experiments showing increased patient flow into the screening and diagnostic funnel, and a focus on ROI for every demand-generation project.
Quote (Mick Farrell): We launched a renewed and refreshed brand, we scaled digital diagnostics and titration tools, we expanded intelligent therapy, we activated new patients, and replenished supplies for existing patients worldwide. The ROI for every demand-generation and demand-capture project is essential.
Theme: Tariffs and US manufacturing resilience. Management reaffirmed tariff exemptions under the Nairobi protocol and indicated that tariffs would not materially impact results, while detailing US manufacturing expansion (Calabasas, CA) to enhance US supply resilience and scale mass resupply.
Quote (Mick Farrell): We do not expect the introduction of US tariffs to have a material impact on our financial results; we will open our $30 million advanced manufacturing facility in Calabasas, California in June 2025. This will almost double our US footprint and expand mass resupply capabilities.
Theme: GLP-1 and market dynamics. The company discussed potential demand-generation channels with GLP-1 therapies and consumer wearables, emphasizing ROI and the importance of physician education and channel partnerships to expand the CPAP/titration-adherence funnel over time.
Quote (Mick Farrell): We are not waiting for GLP-1 drivers; we are pursuing CME education and targeted physician outreach to high-volume GLP-1 providers to improve the gold-standard therapy adoption.
Night Owl is a fingertip-sized home sleep apnea test that is being used by physicians, sleep labs, as well as independent diagnostic and testing facilities to diagnose patients. Widespread adoption of our Night Owl will help more efficiently move patients through the screening and diagnostic funnel so that physicians can then write prescriptions and home care providers can then set up those patients on therapy and take care of them for life.
— Mick Farrell
We do not expect the introduction of US tariffs to have a material impact on our financial results. We have tariff exemptions in place—Nairobi protocol—and we reaffirmed that just weeks ago.
— Mick Farrell
Forward Guidance
Near-term visibility remains constructive but modest, with a focus on margin stability and cash generation to support capital return and selective growth investments. Expectations include:
- Gross margin: broadly flat in Q4 FY2025 vs Q3 FY2025, reflecting ongoing manufacturing and logistics efficiencies but offset by currency movements; management expects improvement opportunities through AS11 platform transition and procurement optimization over time.
- Operating expenses: SG&A as a percentage of revenue expected in a range of 18-20% for the remainder of FY2025; R&D as a percentage of revenue expected to be 6-7% for the remainder of FY2025; both reflect ongoing investments in the digital ecosystem and brand expansion.
- Tax and earnings: Effective tax rate guidance 19-21% for the full year; GAAP tax benefit related to IRS refunds is treated as a non-GAAP item; non-GAAP EPS expected to reflect continued profitability momentum.
- Capital allocation: Buybacks targeted at ~$100M per quarter starting in Q4 FY2025, complemented by dividends and tuck-in acquisitions aligned with the 2030 strategy; ROIC targets to be achieved through bolt-on acquisitions that are ROI-positive and synergistic with the Sleep Health and Home Healthcare Tech platform.
- Capex and manufacturing: Planned US manufacturing expansion (Calabasas) to enhance US mass-reupply capacity; capex discipline to be maintained and ROIC to be optimized through scale and automation.
- Monitoring: Investors should watch for (i) progression of Night Owl adoption and diagnostic-to-therapy conversion metrics; (ii) impact of GLP-1–driven demand capture on referrals and channel mix; (iii) resilience and efficiency gains from the AS11 platform and supply-chain initiatives; and (iv) any macro shifts in FX and global trade policy.
Overall, investors should expect a steady-to-modest growth trajectory with substantial free cash flow generation that supports a balanced capital-allocation approach (dividends, buybacks, and selective M&A) while maintaining a strong balance sheet.