Medical device company ResMed (NYSE: RMD) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 11% year on year to $1.42 billion. Its non-GAAP profit of $2.81 per share was 3.2% above analysts’ consensus estimates.

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StockStory’s Take

ResMed’s fourth quarter performance drew a positive market reaction, with management attributing the outperformance to strong global demand for its masks and devices, as well as continued growth in its digital health software. CEO Michael Farrell highlighted double-digit growth in the U.S. mask segment—supported by the launch of new fabric mask products and expansion of direct-to-consumer initiatives. Management also pointed to operational efficiencies, particularly in supply chain and manufacturing, as key factors in margin expansion during the quarter. Notably, increased patient engagement, including those starting therapy after using GLP-1 medications, contributed to higher device adoption and resupply rates.

Looking ahead, ResMed’s guidance is anchored by continued investment in research and development, the rollout of new AI-enabled features, and expansion of its manufacturing footprint in the U.S. Management expects sustained demand from both healthcare providers and motivated patients, with CEO Michael Farrell emphasizing, "We need to be prepared to address this ongoing and growing awareness of sleep apnea as well as other sleep health and breathing health disorders." Additionally, the company is closely monitoring the evolving regulatory environment and competitive landscape, especially as new patient flow is driven by both pharmaceutical and wearable technology partners.

Key Insights from Management’s Remarks

Management emphasized that mask innovation, digital health software growth, and investments in demand generation were the primary drivers of quarterly results, while operational execution supported margin improvements.

• Mask portfolio expansion: The launch of the F30i Comfort and F30i Clear fabric masks received strong initial feedback, allowing ResMed to differentiate itself and capture additional market share, particularly in the U.S.
• Digital health ecosystem growth: The continued adoption of ResMed’s myAir platform and integration of AI-enabled features, such as Comfort Match, supported higher patient adherence and therapy engagement.
• Impact of GLP-1 medications: Management observed that patients prescribed GLP-1 medications were more likely to start and remain on CPAP therapy, resulting in increased device use and resupply events over both short and long terms.
• Geographic expansion and demand generation: Direct-to-consumer campaigns and educational initiatives in markets like China, Europe, and Australia drove increased awareness and patient inflow, helping to offset regional variability in device demand.
• Operational efficiencies: Improvements in supply chain management and expansion of manufacturing capacity in the U.S. contributed to gross margin gains, with management targeting ongoing margin improvements through 2030.

Drivers of Future Performance

ResMed’s outlook is shaped by ongoing investments in product innovation, expansion of digital health capabilities, and strategies to capture rising patient demand fueled by broader awareness initiatives.

• AI and product innovation: Management highlighted plans to expand AI-enabled features across devices and digital platforms, aiming to increase therapy adherence and differentiate product offerings in a competitive market.
• Manufacturing and supply chain expansion: The construction of a new U.S. distribution center and scaling of domestic manufacturing are expected to improve delivery speeds and support future growth, while supply chain initiatives are targeted to deliver annual gross margin improvements through 2030.
• Patient funnel development: The company is focused on educating primary care physicians and leveraging partnerships with pharmaceutical and wearable tech firms to drive awareness and diagnosis of sleep apnea, aiming to expand the addressable patient population and enhance long-term adherence rates.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the adoption trajectory of ResMed’s new fabric masks and AI-enabled digital tools, (2) progress on expanding the U.S. manufacturing and distribution infrastructure, and (3) the effectiveness of education and awareness campaigns in driving new patient inflow. Additionally, we’ll watch for regulatory updates and any shifts in competitive dynamics that could impact market share.

ResMed currently trades at $263.81, up from $257.61 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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