RESMED INC

ResMed Inc. is a global leader in digital health and cloud-connected medical devices, designing innovative solutions to treat and keep people out of the hospital, empowering them to live healthier, higher-quality lives. The company's digital health technologies and cloud-connected medical devices transform care for people with sleep apnea, chronic obstructive pulmonary disease (COPD), and other chronic diseases. ResMed's comprehensive residential care software platforms support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. The company operates in the sleep and breathing health market, which it believes is globally underpenetrated, and the residential care software market, which it believes is fragmented and underserved. A study published in Lancet Respiratory Medicine in 2019 estimated that mild to severe OSA impacts more than 936 million people worldwide, including 54 million Americans, and of those impacted globally, it was estimated that more than 424 million would have moderate to severe sleep apnea. It is estimated that less than 20% of those with OSA have been diagnosed or treated in the U.S., and 10% or less in other markets.

ResMed's primary Sleep and Breathing Health competitors include Philips BV; Fisher & Paykel Healthcare Corporation Limited; DeVilbiss Healthcare; Apex Medical Corporation; BMC Medical Co. Ltd.; React Health Corporation; Jiangsu Yuyue Medical Equipment & Supply Co., Ltd, and Lowenstein Medical SE & Co. KG plus regional and new-entrant manufacturers. The company's products also compete with surgical procedures, nerve stimulation devices, and dental appliances designed to treat OSA and other sleep apnea-related respiratory conditions. The adoption of new pharmaceuticals to treat obesity, a typical comorbidity of OSA, could impact ResMed's ongoing or future sales. For its Residential Care Software business, competition is also intense, rapidly evolving, and subject to changing technology, low barriers to entry, shifting customer needs, and frequent introductions of new products and services. ResMed believes the principal competitive factors are product features, value-added solutions, quality, reliability and price, with customer support, reputation and efficient distribution also being important factors.

ResMed generates revenue through two segments: Sleep and Breathing Health and Residential Care Software. Sleep and Breathing Health revenue relates primarily to the sale of therapy-based equipment, including devices, masks, diagnostic products, and accessories, with some contracts including additional performance obligations such as extended warranties and provision of data for patient monitoring. Residential Care Software revenue relates to the provision of software access with ongoing support and maintenance services as well as professional services such as training and consulting. For the Sleep and Breathing Health business, revenue is recognized when products are shipped to the customer in accordance with contractual shipping terms, while for the Residential Care Software business, revenue associated with cloud-hosted services is recognized as it is provided. The company's digital enablement is central to its strategy, leveraging an installed base of more than 30 million patients using cloud-connected devices on AirView and over 10 million patients registered to its myAir platform.

ResMed's Sleep and Breathing Health segment includes devices, mask systems, diagnostic products, and connected solutions. Devices, which include CPAP, APAP, bilevel, ASV, and HFT devices, accounted for approximately 52% of net revenues in fiscal years 2025, 2024, and 2023. Masks, diagnostic products and accessories together accounted for approximately 36%, 35%, and 34% of net revenues in fiscal years 2025, 2024, and 2023, respectively. The company's device portfolio includes the AirSense 11 platform, which introduced new features such as a touch screen, algorithms for patients new to therapy, and digital enhancements like over-the-air update capabilities, and the AirMini portable CPAP. Mask systems include minimalist, freedom, ultra soft, and universal fit categories. Diagnostic products include ApneaLink Air, NightOwl, and EasyCare Tx. Connected solutions include AirView, a cloud-based system for remote monitoring, and myAir, a patient engagement application. Global revenue from devices was $2,665,173 thousand ¹ in fiscal 2025, and masks and other revenue was $1,839,717 thousand ².

ResMed's Residential Care Software segment provides cloud-based solutions to healthcare providers operating in the residential care market, including HME and home infusion providers, home health and hospice providers, skilled nursing facilities, private duty nursing organizations, senior living facilities, and life plan communities. Residential Care Software revenue accounted for approximately 12% of net revenue in each of fiscal years 2025, 2024, and 2023. The segment's platforms include Brightree, HEALTHCAREfirst, MatrixCare, and MEDIFOX DAN solutions. These platforms include capabilities for billing and business management, electronic medical records, revenue cycle management, operational analytics, patient engagement, and workforce management. Today, Residential Care Software solutions support residential care providers serving more than 160 million individual patient accounts ³. Net revenue from the Residential Care Software business for fiscal year 2025 was $641,437 thousand ⁴.

In May 2025, ResMed acquired VirtuOx, a software-enabled independent diagnostic testing facility (IDTF) and provider of technology solutions to facilitate in-home and remote testing services for sleep, respiratory, cardiac, and other health conditions across the U.S. The acquisition is not material to ResMed's financial results. In April 2025, ResMed made its home sleep apnea test, NightOwl, available across the U.S. During fiscal year 2025, ResMed repurchased approximately 1,262,000 shares ⁵ at a cost of $300,025 thousand ⁶. The company paid cash dividends of $2.12 per common share ⁷ totaling $310,880 thousand ⁸ during fiscal year 2025. As of June 30, 2025, 10.8 million additional shares ⁹ can be repurchased under the approved share repurchase program. The company also repatriated $1,050,000 thousand ¹⁰ to the U.S. during fiscal year 2025 from earnings generated in that year.

Net revenue in fiscal year 2025 increased to $5,146,327 thousand ¹¹ from $4,685,297 thousand ¹² in fiscal year 2024, an increase of 10%. Gross profit increased to $3,054,970 thousand ¹³ from $2,655,303 thousand ¹⁴ in fiscal year 2024, an increase of 15%. Gross margin was 59.4% ¹⁵ for fiscal year 2025, compared with 56.7% ¹⁶ for fiscal year 2024. Net income for fiscal year 2025 was $1,400,723 thousand ¹⁷ compared to $1,020,951 thousand ¹⁸ for fiscal year 2024. Diluted earnings per share for fiscal year 2025 was $9.51 ¹⁹ compared to $6.92 ²⁰ for fiscal year 2024, an increase of 37%. Total operating cash flow for fiscal year 2025 was $1,751,588 thousand ²¹.

ResMed's strategy includes growing and differentiating its core sleep apnea portfolio by integrating artificial-intelligence and machine-learning algorithms to further enhance therapy performance and user experience. The company aims to drive higher rates of screening, diagnosis, and therapy adoption through simpler care pathways. In April 2025, ResMed made its home sleep apnea test, NightOwl, available across the U.S., providing a simplified, accurate, and efficient way to diagnose OSA from the comfort of an individual's home. In May 2025, the company acquired VirtuOx, an IDTF, to expand its ability to partner with healthcare providers to help streamline the diagnostic process, while expanding collaboration with home medical equipment providers to efficiently support patients to start treatment. ResMed also aims to capitalize on broader sleep and breathing health adjacencies, including insomnia, COPD and other respiratory and related conditions, and is committed to ongoing innovation of its breathing health products, providing advanced and expanded integrations of its therapy-based software solutions, including AirView.

ResMed's strategy includes investing in an integrated, intelligent digital-health ecosystem delivered at home. The company can leverage its installed base of more than 30 million patients ²² using cloud-connected devices on AirView and over 10 million patients ²³ registered to its myAir platform to enable personalized, efficient and data-driven care. The company also aims to align solutions to enable smarter, connected care through its leading Residential Care Software solutions, which are a key enabler of its Sleep and Breathing Health business, driving revenue synergies, contributing to demand generation and providing cohesion and interoperability for its AI-driven digital platform. ResMed is connecting capabilities across the platforms in residential care settings to help customers be more efficient, better serve people, keep them out of hospital, and provide care in lower-cost, higher-quality care settings.

The filing discusses that gross margin increased from 56.7% ²⁴ in fiscal year 2024 to 59.4% ²⁵ in fiscal year 2025, due primarily to procurement, manufacturing and logistics efficiencies, $14,300 thousand ²⁶ of combined expenses associated with the field safety notifications for masks with magnets and Astral devices recognized during fiscal year 2024, as well as a reduction in the amortization of acquired intangibles during fiscal year 2025. The company continually assesses opportunities for improved operational efficiency and to better align expenses with revenues, while preserving its ability to make investments in research and development projects, product and technology acquisitions and its people. As a result of these assessments, there have been, and may in the future be, restructuring activities, realignment of strategies and cost reduction initiatives.

ResMed operates a globally distributed manufacturing network designed to optimize quality, control costs, reduce time to market for new product introduction, and generate supply chain resilience. The company's main manufacturing facilities for Resmed-branded products are located in Tuas, Singapore; Sydney, Australia; Chatsworth, California; Calabasas, California; Johor Bahru, Malaysia; and Atlanta, Georgia. The principal factory for Curative-branded products is in Suzhou, China, and Narval-branded products are manufactured in Lyon, France. ResMed will continue to expand and balance volume across its network to meet scale, cost, resilience, and environmental performance objectives, and to meet the needs of customers and patients. The company's supply chain may be impacted by periodic transport disruptions and supply constraints on certain raw materials and electronic components, including semiconductor chips and magnets.

During fiscal year 2025, ResMed invested $331,284 thousand ²⁷ on research and development activities, which represents 6.4% ²⁸ of net revenues. Capital expenditures for purchases of property, plant and equipment were $89,865 thousand ²⁹ during fiscal year 2025. During fiscal year 2025, the company repurchased approximately 1,262,000 shares ³⁰ at a cost of $300,025 thousand ³¹. As of June 30, 2025, 10.8 million additional shares ³² can be repurchased under the approved share repurchase program. The company paid cash dividends of $2.12 per common share ³³ totaling $310,880 thousand ³⁴ during fiscal year 2025. On July 31, 2025, the board of directors declared a cash dividend of $0.60 per common share ³⁵, to be paid on September 18, 2025, to shareholders of record as of the close of business on August 14, 2025.

ResMed faces structural headwinds including the impact of tariffs and trade wars on its suppliers. On April 5, 2025, U.S. Customs and Border Protection issued a Notice of Implementation confirming that current tariff relief for products like ResMed's continues, but if reciprocal tariffs go into widespread effect, they could have a material impact on the company's business and financial statements through interruption of supply chains, increases in costs, or an increase or disruption of global shipping. The company also faces risks from changes to trade policy, including tariff measures introduced in February 2025, which may drive new inflation risks in its supply chain. Additionally, the company is subject to risks from global macroeconomic conditions, including inflation, supply chain disruptions, such as recent shipping disruptions in the Red Sea, interest rate and foreign currency rate fluctuations, and volatility in the capital markets.

ResMed faces regulatory headwinds including the potential impact of healthcare reform and changes in reimbursement. The DMEPOS Competitive Bidding Program's temporary gap period has recently ended with the announcement of new regulations reinstating competitive bidding in the U.S., and ResMed expects that CMS will initiate the next round of the program. The One Big Beautiful Bill Act, signed into law on July 4, 2025, cuts federal Medicaid funding by $930 billion ³⁶ over ten years but provides reimbursement rate increases for providers, and is projected to increase the federal deficit, which may lead to mandatory Medicare cuts and reduction in payments to providers in the future. The Bill also makes changes to the ACA that could reduce enrollment, including shortening enrollment periods and eliminating automatic re-enrollment. The VA has proposed an adjustment to amend the schedule of VA ratings for sleep apnea, which could result in fewer veterans pursuing treatment of sleep apnea using CPAP.

ResMed faces material risks from the potential impact of new pharmaceuticals, such as GLP-1 weight loss drugs, which may lower the occurrence of obesity and potentially reduce the severity of OSA, impacting demand for the company's products. The company also faces risks from healthcare reform and cost-cutting measures, including the potential reinstatement of the DMEPOS Competitive Bidding Program, which could result in reduced Medicare payment for CPAP and respiratory assist devices. The One Big Beautiful Bill Act, signed into law on July 4, 2025, cuts federal Medicaid funding by $930 billion ³⁷ over ten years and is projected to increase the number of people without health insurance by at least 11.8 million ³⁸ by 2034, which could adversely impact the number of individuals who seek to use ResMed's products and services. The company is subject to risks from global macroeconomic conditions, including the impact of tariffs and trade wars, with the U.S. government imposing significant tariffs impacting a wide variety of goods. Additionally, ResMed faces risks from supply chain disruptions, including constraints on raw materials and electronic components such as semiconductor chips and magnets, and from the potential reintroduction of products by Philips, which could lead to reduced demand for ResMed's products.

Management's message emphasizes ResMed's position as a global leader in digital health and cloud-connected medical devices, with a strategy focused on growing and differentiating its core sleep apnea portfolio, accelerating market growth through awareness, capitalizing on broader sleep and breathing health adjacencies, investing in an integrated, intelligent digital-health ecosystem delivered at home, and aligning solutions to enable smarter, connected care. Key themes include the company's commitment to ongoing investment in research and development and product enhancements, with $331,284 thousand ³⁹ invested in R&D during fiscal year 2025, representing 6.4% ⁴⁰ of net revenues. Management highlights the company's strong financial performance, with net revenue increasing to $5,146,327 thousand ⁴¹ in fiscal year 2025, an increase of 10% compared to fiscal year 2024, and net income of $1,400,723 thousand ⁴² or $9.51 per diluted share ⁴³. The company's strategic priorities include leveraging its installed base of more than 30 million patients ⁴⁴ using cloud-connected devices on AirView and over 10 million patients ⁴⁵ registered to its myAir platform, and connecting capabilities across its Residential Care Software platforms to help customers be more efficient and keep people out of hospital.