Resmed Inc ((RMD)) has held its Q1 earnings call. Read on for the main highlights of the call.
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ResMed Inc. recently held its earnings call for the first quarter of Fiscal Year 2026, revealing a strong overall performance with notable revenue growth and successful product launches. The sentiment during the call was optimistic, highlighting improved gross margins and strategic advancements. However, challenges such as slower growth in the SaaS business and increased tax rates due to global minimum tax legislation were also acknowledged.
Strong Revenue Growth
ResMed reported a commendable 9% headline revenue growth, with an 8% increase on a constant currency basis for Q1 of Fiscal Year 2026. This growth was driven by robust performance across various regions and product categories, showcasing the company’s ability to capitalize on market opportunities.
Impressive U.S. and Latin America Device Sales
Device sales in the U.S., Canada, and Latin America saw an 8% increase, reflecting high single-digit growth. This was supported by new patient setups and resupply growth, indicating a strong demand for ResMed’s offerings in these regions.
Expansion in New Product Lines
ResMed introduced the AirTouch F30i mask platform, marking the launch of the first fabric full-face masks in the market. The company plans to expand this innovative product to additional regions, further strengthening its market position.
Gross Margin Improvement
Efforts in the global supply chain led to a 280 basis points year-over-year gross margin expansion. This improvement was driven by component cost reductions and enhanced manufacturing efficiencies, contributing positively to the company’s financial health.
Strong Cash Flow and Shareholder Returns
The company reported a robust cash flow from operations amounting to $457 million. ResMed maintained a strong balance sheet and returned over $238 million to shareholders through dividends and share repurchases, demonstrating its commitment to delivering shareholder value.
SaaS Business Growth Challenges
ResMed’s residential care software business experienced mid-single-digit growth of 5% on a constant currency basis. This was impacted by weaker performance in the senior living and long-term care segments, highlighting an area for potential improvement.
Global Minimum Tax Impact
The effective tax rate increased to 22.3% from 19.2% in the previous year due to global minimum tax legislation. This change negatively affected earnings per share by $0.04, presenting a financial challenge for the company.
Restructuring Charges
Following a workforce planning review, ResMed recorded a restructuring-related charge of $16 million. This charge was part of aligning with strategic priorities and impacted the non-GAAP financial results.
Forward-Looking Guidance
Looking ahead, ResMed provided guidance that emphasized continued growth and strategic focus. The company aims for significant growth in their devices and masks categories, with a strategic expansion of their mask portfolio and acceleration in direct-to-consumer markets globally. A new distribution facility in Indianapolis is expected to enhance product delivery by 2027. ResMed is also investing in R&D and SG&A, with a commitment to achieving high single-digit growth and double-digit operating profit growth within the next 12 months.
In conclusion, ResMed’s earnings call highlighted a strong quarter with impressive revenue growth and strategic advancements. Despite facing challenges such as increased tax rates and slower SaaS business growth, the company remains focused on expanding its product lines and enhancing shareholder value. The forward-looking guidance suggests a positive trajectory, with plans to strengthen market presence and operational efficiency.