[Management View]
ResMed emphasized operational efficiency, digital innovation, and capital deployment as drivers for continued growth. Key metrics included a 10% YoY revenue growth and a 230 basis points improvement in gross margin. Strategic priorities focused on integrating residential care software leadership into broader business functions and expanding digital strategy with AI and GenAI features.

[Outlook]
Performance guidance for FY2026 includes projected gross margins of 61%-63%, SG&A expenses at 19%-20% of revenue, and R&D expenses at 6%-7% of revenue. Future plans involve increasing share repurchase activity and expanding diagnostic funnels through acquisitions like Vertuox.

[Financial Performance]
ResMed reported $1.35 billion in non-GAAP revenue for Q4 FY2025, representing 10% headline growth. Gross margin improved to 61.4%, up 230 basis points YoY. Operating profit increased by 19%, and net income rose 22%. Non-GAAP diluted EPS increased by 23%, with a $0.05 per share benefit from foreign exchange rates.

[Q&A Highlights]
Question 1: Just wanted to understand the rest of world devices growth, you know, kind of really good growth there. Just wanted to understand the dynamics you're seeing and if there was any kind of large tender that contributed to that Rest of World Devices revenues.
Answer: Growth in Europe, Asia, and rest of world devices was driven by multiple factors, including market growth in mid-single digits and demand generation activities. Specific markets like Japan and China showed strong results, contributing to the overall performance.

Question 2: Really good looking gross margin and even better guidance. Brett, can you just talk through the elements of that gross margin guidance and maybe touch on the FX, which is probably gonna get to you a little coming into 26.
Answer: Gross margin improvement was driven by procurement initiatives, manufacturing efficiencies, logistics improvements, and favorable foreign currency movements. FX accounted for almost half the sequential improvement, with the remainder due to internal cost efficiencies.

Question 3: I guess I just want to discuss Virtuox. Thank you for the disclosures on the maturity of revenues. But I guess it's more interested I'm more interested to understand the roadmap for this business towards your acquisition. What are the areas of investment that ResMed will be making over the next twelve months? And also what are leading indicators that we can look at to assess those returns, please?
Answer: Virtuox is part of a portfolio strategy to expand home sleep apnea testing. Investments will focus on marketing and capabilities to scale home sleep apnea testing. Leading indicators include patient flow through the diagnostic funnel and partnerships with HME providers.

Question 4: Just a question on US mask growth. Once again, low double digits. Seems to be ahead of what you described growth at as high single digits on the last quarter. So just wondering if you can go into a bit of detail as to how much you think that is share gains versus just stronger growth in resupply overall at an industry level.
Answer: US mask growth was driven by innovation in patient interface technologies, competitive share gains, and improved resupply programs. The market growth rate is high single digits, but ResMed's performance was ahead of this due to strong resupply efforts.

Question 5: Competitive bidding. The proposal is calling for maybe just a consolidation of the number of contract suppliers out there. That just seems like a pretty good draconian proposal. Maybe just walk through that a little bit. You know, if that does kinda stick in the final rule, like, how rapidly do you think consolidation occurs in the DME space? And then on the second question is a broader strategy question.
Answer: Competitive bidding is expected to have a minimal impact on ResMed's business. The guidelines are similar to previous rounds, and the rates are in line with private payers. ResMed will support HME providers through the process. Regarding broader strategy, ResMed aims to maintain relationships with patients across various therapies, including CPAP, dental devices, and pharmaceuticals.

Question 6: Just post the Zepbound label, interested in your observations around new patients coming into the system and then maybe any feedback you can provide around the physicians prescribing patterns post that label if they are starting to prescribe GLP-1s in conjunction with CPAP? Any observations on those two would be appreciated.
Answer: GLP-1 prescriptions have led to an increase in CPAP therapy initiation. ResMed is seeing an 11% higher start rate for patients with GLP-1 prescriptions. Continuous medical education programs are helping primary care physicians understand the benefits of CPAP therapy.

Question 7: Just wanted to circle back on the gross margin question from earlier. I thought the answer on 4Q drivers was very clear. Just wanted to follow-up more on the FY 2026 guidance. 61% to 63% represents 200 bps year over year at the midpoint. And 300 bps at the high end. So pretty significant there. And was just hoping you could talk through maybe the primary driver supporting that level of expected improvement. How much do you think is coming from the FX movement this quarter? And then any considerations around seasonality or phasing we should be thinking about?
Answer: FY2026 gross margin guidance is supported by procurement initiatives, manufacturing improvements, logistics efficiencies, and product mix tailwinds. FX movements will continue to play a role, but the primary drivers are internal cost optimization efforts.

Question 8: Maybe you could just summarize in your words the impacts that competitive bidding did have on your business and maybe more importantly didn't I know there was a lot of concerns covering you back then, and then ultimately, it wasn't that bad. And could you draw any lines from that situation to what may happen now?
Answer: Competitive bidding in previous rounds led to adjustments in Medicare reimbursement rates, aligning them with private payers. The current guidelines are similar, and ResMed expects minimal impact. The company will support HME providers and advocate for patient access to care.

[Sentiment Analysis]
Analysts and management displayed a positive tone, emphasizing strong financial performance and strategic initiatives. Management's confidence in future growth and operational efficiency was evident.

[Quarterly Comparison]
| Metric | Q4 FY2025 | Q3 FY2025 | Q4 FY2024 |
|---------------------------|-----------|-----------|-----------|
| Revenue | $1.35B | $1.30B | $1.23B |
| Gross Margin | 61.4% | 59.9% | 59.1% |
| Operating Profit | $472M | $445M | $397M |
| Net Income | $330M | $310M | $270M |
| Non-GAAP Diluted EPS | $1.75 | $1.65 | $1.42 |
| Free Cash Flow | $539M | $500M | $450M |

[Risks and Concerns]
Risks include potential impacts from competitive bidding, currency fluctuations, and geopolitical challenges. Management is focused on mitigating these risks through strategic initiatives and operational efficiencies.

[Final Takeaway]
ResMed's Q4 FY2025 performance highlights strong revenue growth, improved gross margins, and strategic investments in digital innovation and acquisitions. The company's focus on operational efficiency and expanding diagnostic capabilities positions it well for future growth. Management's confidence in achieving FY2026 targets and continued capital returns to shareholders underscores ResMed's resilience and commitment to delivering value.