ResMed Inc.’s RMD adjusted earnings per share (EPS) in the second quarter of fiscal 2025 were $2.43, up 29.2% year over year. The metric beat the Zacks Consensus Estimate by 5.6%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The adjustments include certain non-recurring expenses/benefits like the amortization of acquired intangibles, along with the income tax effect on those adjustments.

GAAP EPS in the reported quarter was $2.34, up 64.8% from the year-ago level.

Following the announcement, shares of RMD rose 0.1% in the pre-market trading today.

RMD’s Q2 Revenues

On a reported basis, revenues increased 10.3% year over year (up 10% at the constant exchange rate or CER) to $1.28 billion. The figure topped the Zacks Consensus Estimate by 1.6%.

ResMed’s Q2 Sales: A Closer View 

ResMed operated through two reporting units, namely Sleep and Respiratory Care and Software as a Service (SaaS).

In alignment with the 2030 Strategy announced during Investor Day in September 2024, these reporting units have been renamed to Sleep and Breathing Health (formerly Sleep and Respiratory Care) and Residential Care Software (formerly SaaS). The methodology for attributing financial results to these reporting units remains unchanged. ResMed noted that revenues from prior periods are consistent and comparable to the previous report.

Sleep and Breathing Health

Total revenues improved 11% (same at CER) from the prior-year period to $1.13 billion. The figure topped our model’s projection of $1.10 billion.

Within this business, revenues from global Devices totaled $669.3 million, up 10% (up 11% at CER), and Masks and other global revenues amounted to $456.3 million, up 11% (same at CER). Both increases are on a year-over-year basis. Our model had forecasted $647.6 million in Devices, and $447.8 million in Masks and others.

On a geographic basis, the segment’s revenues in the combined Europe, Asia and other markets rose 8% (same at CER) to $376.6 million. Our model had anticipated $371.8 million.

In the United States, Canada and Latin America, revenues totaled $748.9 million, up 12% year over year. Our model’s projected revenues were $884.4 million.

Residential Care Software

Revenues in this segment grew 8% year over year to $156.5 million, which fell short of our model’s projection of $160.7 million.

ResMed’s Margin Performance

The adjusted gross profit in the quarter under review rose 14.7% to $758.9 million despite a 4.4% uptick in the adjusted cost of sales (excluding the amortization of acquired intangibles, masks with magnet field safety notification expenses and Astral field safety notification expenses).

The adjusted gross margin for the fiscal second quarter was 59.2%, reflecting an expansion of 230 basis points (bps).

Selling, general and administration expenses rose 8.8% year over year to $241.6 million. Research and development expenses increased 10.1% to $81.4 million. The adjusted operating income was $435.9 million in the quarter under discussion, up 19.3% from the year-ago quarter’s level. The adjusted operating margin expanded 275 bps year over year to 34%.

RMD’s Financial Updates

ResMed exited the second quarter of fiscal 2025 with cash and cash equivalents of $521.9 million compared with $426.4 million at the end of fiscal first quarter.

ResMed Inc. Price, Consensus and EPS Surprise

ResMed Inc. price-consensus-eps-surprise-chart | ResMed Inc. Quote

Total debt (short and long-term) totaled $672.8 million compared with $677.5 million at the end of the fiscal first quarter.

The cumulative net cash provided by operating activities at the end of the fiscal second quarter was $634.2 million compared with $559.1 million in the year-ago period.

The company paid out $78 million in dividends in the fiscal second quarter and also repurchased 307,000 shares for consideration of $75 million as part of its ongoing capital management.

Our Take on RMD Stock

ResMed ended the second quarter of fiscal 2025 with an earnings and revenue beat. The company achieved robust revenue growth across all product and geographic categories. Masks and accessories growth was boosted by the ongoing rollout of Brightree ReSupply program. Snap technology has helped the segment grow in the U.S. market. 

Global device sales were driven by strong market performance from both the AirSense 10 and the AirSense 11 platforms. A strong focus on operational excellence drove the expansion in both margins, which is highly encouraging.

ResMed had some notable strides in the fiscal second quarter, such as announcing the launch of the Kontor Head Strap, a premium accessory for Apple Vision Pro, which delivers a superb balance of softness and support for extended wear time. Additionally, the company reaffirmed its commitment to expanding its Singapore operations in partnership with the Singapore Economic Development Board.  All these developments bode well for the stock.

RMD’s Zacks Rank and Other Key Picks

ResMed currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader medical space are Veracyte VCYT, Cardinal Health CAH and Haemonetics HAE.

Veracyte, carrying a Zacks Rank #1 (Strong Buy) at present, reported a third-quarter 2024 adjusted EPS of 19 cents, which surpassed the Zacks Consensus Estimate by a massive 850%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Revenues of $115.9 million topped the Zacks Consensus Estimate by 5.8%. 

VCYT has an estimated earnings growth rate of 137.2% for 2024 compared with the industry’s 15%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 520.58%.

Cardinal Health, carrying a Zacks Rank #2 at present, posted first-quarter fiscal 2025 adjusted EPS of $1.88, which exceeded the Zacks Consensus Estimate by 9.8%. Revenues of $52.28 billion surpassed the Zacks Consensus Estimate by 2%. CAH has an estimated long-term earnings growth rate of 10.5% compared with the industry’s 9.6%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.24%.

Haemonetics, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2025 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 2.8%. Revenues of $345.5 million topped the Zacks Consensus Estimate by 0.7%. HAE has an estimated earnings growth rate of 15.9% for fiscal 2025 compared with the industry’s 12.2%. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%.

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