ResMed’s global market leadership in sleep-health therapies boosts full-year 2024 revenue and profit.

About ResMed Inc

ResMed Inc (ResMed, ASX: RMD) is a global leader in the development, manufacture and distribution of sleep technology products and software that employs 10,000 people and has a presence in 140 countries. The basis of its name is short for “Respiratory Medicine”. ResMed is head-quartered in San Diego and its cloud-connected devices and software support patients with Sleep Apnea and Chronic Obstructive Pulmonary Disease. These illnesses arise from a major drop in oxygen during sleep which increases the risk of chronic health problems.

Ongoing sleep disorder product demand boosts annual revenue by 11 percent

ResMed is the sleep-health market leader in a world where 2.5 billion people suffer from sleep-health and breathing disorders. These medical conditions are collectively referred to as Obstructive Sleep Apnea. This enormous underpenetrated market opportunity for sleep-health therapies is set to drive solid growth for ResMed’s devices, masks, ventilators, and related software products for decades to come.

Full-year 2024 earnings results reveal year-on-year revenue growth of 11 percent to US$4.7 billion, 14 percent higher net income to $US$1.02 billion, and operating cash flow of US$1.4 billion. The strong cash conversion ratio of 137 percent of net profit to operating cash flow enabled US$0.8 billion to be applied to debt reduction. ResMed’s gross margin improved 90 basis points to an impressive 56.7 percent, up from 55.8 percent in FY23. Higher margins are attributable to reduced freight costs, manufacturing cost improvements, and higher average selling prices as well as a favourable product mix.  Selling, General and Administrative cost increases were contained to a modest 5 percent in a high-inflation environment.

ResMed will pay an unfranked USD53 cents dividend on 19 September. This proposed dividend is in relation to the June quarter and the AUD equivalent amount will be announced by ResMed on 16 August.

Higher sustainable earnings

ResMed’s durable competitive edge is that its technology-based, cloud-connected medical devices and digital health technologies lower the cost of healthcare for consumers and healthcare providers. This occurs because ResMed’s software systems and devices treat and keep people out of hospital by enabling clinicians to provide care in the home or care setting of the patient’s choice.

As a global player, ResMed has operating leverage through scale benefits while its business model of “invent it once and sell it many times” explains the extraordinarily high gross profit margin and its high operating profit to operating cash flow conversion ratio. These strong financial metrics support dependable dividends and ongoing share buy-backs.

ResMed’s addressable market is 2.5 billion people worldwide, comprising 1 billion people with Obstructive Sleep Apnea, and 1.5 billion people with asthma, Chronic Obstructive Pulmonary Disease, and insomnia. This huge underpenetrated market combined with ResMed’s leading high-growth digital health technology and proven, established devices such as masks and ventilators should support consistent earnings growth in the decades ahead.